WASHINGTON, DC, Aug. 14 -- A compromise energy legislation proposal advanced by a bipartisan group of US senators falls short of what is needed because it is "light on new production and heavy on new taxes," said the American Petroleum Institute on Aug. 13.
"The proposal's approach to access to federal oil and natural gas resources is far too limited in scope, and it is unfortunately paired with the imposition of at least $30 billion in new taxes on the oil and natural gas industry that would have the effect of limiting needed oil and gas investment," API Pres. Red Cavaney said of the plan, which the so-called "Gang of 10" announced on Aug. 1.
He said that while the proposal would expand access to the US Outer Continental Shelf, it would limit any additions beyond current law in the eastern Gulf of Mexico and only add acreage off four southern Atlantic Coast states. "Even in those areas, development in federal waters less than 50 miles offshore would be banned, despite the fact that offshore facilities would need to be 12 or fewer miles from shore to be visible from land," he said in a letter to all 100 senators.
"Leasing in the North Atlantic and off the Pacific Coast would be banned and plentiful hydrocarbon resources in Alaska would remain off-limits. Significant regulatory burdens on new development would remain in place," Cavaney added.
Imposition of $30 billion in what he termed "clearly discriminatory new taxes" to pay for federal investments in alternative and renewable energy resources "ignores the fact that the industry already provides more than 70% of all North American investment in research and development in emerging energy technologies," API's president maintained.
"The only beneficiaries of such an ill-advised approach would be international competitors in the global oil markets, who would benefit as US companies were made less competitive in the quest to find and develop global energy supplies. Already, the top 27 US energy-producing companies have seen their annual tax liability rise to more than $100 billion, an 80% increase from 2004 to 2006," he continued.
New taxes on these US-based companies would drastically reduce capital which otherwise would be invested in domestic oil and gas production and expanded refinery capacity, according to Cavaney. "The net result could be to stifle high-risk, capital-intensive projects in the US, leaving Americans more dependent on foreign sources of energy while jeopardizing US jobs and economic growth," he warned.
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