API, IPAA: Obama overlooking industry's job-creation potential

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Dec. 3 -- The American Petroleum Institute’s two top officials expressed concern over the White House’s apparent omission from its Dec. 3 jobs forum of chief executives from the oil and gas industry. The Independent Petroleum Association of America’s chairman separately said the Obama administration may not recognize the industry’s economic contributions.

“Several from our individual companies wanted to come. None of them were invited. Neither were any people associated with oil and gas trade associations, to our knowledge,” API Chairman J. Larry Nichols told reporters during a teleconference.

“I think it’s a missed opportunity to talk to one of the largest employers and wealth creators in the United States,” added API Pres. Jack N. Gerard. “We stand ready as an industry to step forward and aid what we’re going to need in the future, which is more energy.”

In a separate letter to US President Barack Obama, IPAA Chairman Bruce H. Vincent said the safe and responsible development of domestic energy resources has never failed to create value, not only for those who are directly involved but also for consumers.

“In a modern context, that value can be realized in the form of new, high-wage jobs for the American people; billions of dollars in revenue [for] state, local, and federal governments; and a genuine means of reducing our dependence on foreign, unstable energy suppliers abroad,” Vincent said.

Forum’s purpose
The forum will be an opportunity for Obama and his economic team to hear from chief executives, small business owners, and financial experts about ideas for continuing to make the economy grow and putting Americans back to work, White House Press Sec. Robert Gibbs said Nov. 30.

Confirmed guests reportedly included chief executives from Google Inc., AT&T Inc., Comcast Corp., Dow Chemical Co., FedEx Corp., and Quest Diagnostics Inc. The White House did not respond to OGJ’s telephone inquiry as to whether oil and gas executives were attending or had been invited.

“We’re doing our best in talking to both members of Congress and the administration about the impact this industry can have,” said Nichols, who also is chairman and chief executive of Oklahoma City-based independent Devon Energy Corp.

“With more than 15 million Americans unemployed, obviously creating jobs is at the top of the president’s list of things to work on, and our industry can help,” Nichols said. “The key, of course, is to produce more of the oil and gas we use here at home and stop importing as much,” he added.

Gerard noted that the oil and gas industry already supports 9.2 million US jobs and adds more than $1 trillion/year to the national economy, not just through direct employment but also with purchases of goods and services from equipment suppliers, construction companies, management specialists, food service firms, and other businesses. Some US oil and gas industry sectors’ wages are twice the national average, he said.

‘Powerful, dynamic’
The industry continues to be one of the most powerful and dynamic US job-creation forces, said Vincent, who also is president of Houston independent Swift Energy Co. “That spirit of growth and innovation is especially present among our nation’s small and independent producers, men and women who, on average, employ just 12 workers each but still find a way to develop 9 out of every 10 wells in service across the country today,” he said.

“We take this work seriously. And we stand ready and willing to put that work to use, in service of the goals and objectives identified by your jobs panel this afternoon,” Vincent said in his letter to Obama.

Vincent said he was pleased when the president released a position statement during his recent China trip hailing the US as a leader in shale gas technology and developing the resource in ways which mitigate environmental risks.

“May we add ‘creating new jobs’ to that list as well?” Vincent said, adding, “Only a couple of years back, analysts predicted that shale gas production in Texas’s Barnett shale would create $6.5 billion in economic output and 70,000 jobs. Nice try. In 2008, the Barnett generated more than 111,000 permanent jobs and $11 billion in economic activity—and the expectation is for those numbers to climb dramatically in the years to come.”

He and Nichols each cited a recent Penn State University report on the Marcellus shale that found that 29,000 jobs were created along the formation in three US Mid-Atlantic states last year, and that more than 50,000 jobs are expected to be created there by yearend. The study also found that Marcellus development has been responsible for more than $2.3 billion of economic development in the area, Vincent said.

Revenue down 90%
Vincent joined the two API officials in expressing concern about the Obama administration’s and US Interior Secretary Ken Salazar’s decisions that have significantly reduced federal oil and gas leasing. “Two years ago, more than $10 billion came into the national treasury from that source,” Gerard indicated. “During the first year of this administration, it’s been less than $1 billion. We believe we could help bring the amount back.”

“The first thing this administration needs to do is stop doing things [that] have a chilling impact on job creation,” said Nichols. “The cap-and-trade bill would impose a huge new tax on industries. The president’s budget would impose new taxes on our own industry,” he said, adding that opening more federal acreage to leasing would be a good second step.

Gerard said, “The American people have spoken on this very clearly and said they would like more access to domestic resources. What has happened since then is a de facto moratorium. Access during the Obama administration’s first year has been low, yet the public comment period [for the latest proposed 5-year OCS plan] produced more than 300,000 responses calling for more access.”

Gerard continued, “We need no subsidy or stimulus, just access, and Salazar could help us. We’re not looking for special treatment. We just want the opportunity to do what we do so well.”

Contact Nick Snow at nicks@pennwell.com.

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