API launches campaign as Senate considers oil tax legislation

The American Petroleum Institute launched a new campaign to educate consumers in seven states about the consequences of increasing oil and gas production costs as the US Senate headed toward a vote on legislation that would repeal federal tax provisions for the industry. “Some bad ideas never seem to go away,” API Tax Policy Manager Stephen Comstock told reporters during a Mar. 26 teleconference.

API said new print and radio ads would run in Missouri, Massachusetts, West Virginia, Virginia, North Carolina, Maine, and Nevada encouraging voters to contact their US senators and urge them to reject new taxes on the industry. “Raising taxes will not lower energy prices for American families and businesses. In fact, the Congressional Research Service says this plan could cause gasoline prices to go higher,” API Pres. Jack N. Gerard said Mar. 26.

The bill before the Senate, S. 2204, would repeal what its sponsor, Robert Menendez (D-NJ), called “Big Oil tax loopholes” by denying the five biggest oil companies the Section 199 federal tax deduction available to other US manufacturers, limit their use of the foreign tax credit, and prevent their using the percentage depletion allowance and deductions for tertiary injectants for intangible drilling and development costs.

The measure also would repeal provisions in the 2005 Energy Policy Act that provided deep gas production incentives and mandatory royalty relief for certain deepwater oil and gas production. Its first title, meanwhile, would extend tax credits for plug-in electric vehicles, alternative fuel vehicle refueling property, cellulosic biofuel production, and production of electricity from wind and other nonfossil fuel sources.

Menendez said the Senate’s scheduled vote the afternoon of Mar. 26 on whether to move his bill forward would come as motorists paid more than $4/gal for regular gasoline while major oil companies reported record profits. “Let me be very clear: Monday’s vote to repeal Big Oil tax subsidies is the Big Test, and Americans will decide who passes and who fails,” he said on Mar. 23. “It’s time to stand up for real families and stand up to Big Oil.”

Politics, not policy

Comstock suggested that the bill simply amalgamates two previous bills rejected by the Senate. “We certainly see it being raised because the president has made it part of his reelection campaign,” he said. “We see it as being more about politics than policy.”

Comstock challenged statements that high profits justify increasing oil and gas taxes to make those companies pay their fair share. The industry already pays more than $30 billion/year in federal taxes, and contributed more than $470 billion to the US economy during 2010 in the form of capital expenditures, payroll, and dividends to shareholders, Comstock said.

He also questioned characterizing as subsidies what actually are tax deductions similar to what other industries routinely take. “More important, the industry pays more in taxes than any other industry, and its effective tax rate is substantially higher than the average for the other S&P Industrials—41% vs. 26%,” he added.

The proposal would steer investment overseas by discouraging domestic expenditures, Comstock maintained. He cited a 2011 Wood Mackenzie study that concluded that raising oil and gas industry taxes would increase federal revenue initially, but cause it to plummet after 5 years and lead to a cumulative $65 billion shortfall after 20 years.

“Wood Mackenzie’s analysis also envisions a loss of nearly 50,000 jobs within a few years, with potential reduction in oil equivalent production of 700,000 b/d in less than 10 years,” he said. “That implies more dependence on foreign oil and an increase in our trade deficit.”

Contact Nick Snow at nicks@pennwell.com.

Related Articles

BOEM publishes second final SEIS for 2008 Chukchi Sea lease sale

02/13/2015 The US Bureau of Ocean Energy Management published a fresh supplemental environmental impact statement for a Chukchi Sea federal oil and gas sale o...

Lukoil lets contract for Uzbekistan gas processing plant

02/13/2015 Russia’s OAO Lukoil has let a contract to a consortium headed by South Korea’s Hyundai Engineering Co. Ltd., Seoul, for the construction of its lon...

Horn Petroleum to reduce Puntland exploration program

02/13/2015 Horn Petroleum Corp., Vancouver, BC, will reduce its presence in Bosaso, Puntland (Somalia), and will “refrain from any operational activity and as...

Birol named to IEA executive director post

02/13/2015 The International Energy Agency’s governing board confirmed the appointment of Fatih Birol as the agency’s next executive director. Birol succeeds ...

Partners submit Johan Sverdrup development plan

02/13/2015 Partners Statoil ASA, Lundin Petroleum AB, Petoro, Det Norske Oljeselskap ASA, and Maersk Oil have submitted a plan for development and operation (...

MARKET WATCH: NYMEX crude oil price jumps more than $2/bbl

02/13/2015 Crude oil prices on the New York market jumped by more than $2/bbl Feb. 12 to settle above $51/bbl, which analysts attributed to more oil and gas c...

Apache’s 2015 capital budget less than half of last year’s $8.5 billion

02/12/2015 Apache Corp., Houston, plans a capital budget of $3.6-4 billion in 2015, with $2.1-2.3 billion directed toward onshore North America and $1.5-1.7 b...

Alaska LNG project partners file resource reports with FERC

02/12/2015 A series of draft environmental and socioeconomic reports for the Alaska LNG project have been submitted to the US Federal Energy Regulatory Commis...

Total reduces budget by 10% to $23-24 billion

02/12/2015 Total SA plans to lower its organic investments to $23-24 billion in 2015 from $26.4 billion in 2014 by reducing spending in brownfield development...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Cognitive Solutions for Upstream Oil and Gas

When Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected