Watching Government: Disappointment, not surprise

Sept. 19, 2011
US producers were more disappointed than surprised that the White House decided to call for higher oil and gas industry taxes to help pay for the president's new jobs legislation.

US producers were more disappointed than surprised that the White House decided to call for higher oil and gas industry taxes to help pay for the president's new jobs legislation.

US President Barack Obama's single negative reference to the industry in his Sept. 8 address to Congress sent a disturbing signal to Independent Petroleum Association of America Pres. Barry Russell, who quickly issued a statement.

"The president's recommendations for improving transportation and the nation's infrastructure fail to recognize the energy required to make these programs successful," Russell said, adding, "It will require oil and natural gas, which should come from American resources. Instead, he calls for taxing our nation's oil and gas industry, one of the few industries that actually is creating jobs today."

Paul W. Bledsoe, a senior advisor at the Bipartisan Policy Center, suggested at a Sept. 8 Energy Jobs Summit on Capitol Hill that traditional and renewable energy industries could help lead a US jobs recovery.

Congress could help by passing a streamlined energy bill that includes infrastructure improvements, along with incentives for more US oil and gas production, increased energy efficiency, and continued alternative and renewable energy research and development, he indicated.

"Governments can't create jobs," noted Kenneth P. Green, a resident scholar at the American Enterprise Institute. "We need to acknowledge that, like a garden, jobs grow. That means not stomping on the soil and picking winners and losers."

Kyle Isakower, American Petroleum Institute vice-president for regulatory and economic policy, observed, "There is a lot of money on the sidelines. If policies are put in place that encourage investment, the oil and gas industry is ready to do so."

‘Exactly the opposite'

Once Obama sent his legislation to Congress on Sept. 12, however, it was obvious that the administration had other ideas. More oil and gas leaders responded.

American Exploration & Production Council Pres. V. Bruce Thompson said on Sept. 13 that the bill's oil and gas provisions "amount to nothing more a tax hike on a single industry that is among the best at creating jobs in today's difficult economic environment…. The result of adopting these policies would be a reduction in jobs and economic activity—exactly the opposite of what our nation needs."

Ending the intangible drilling cost provision would jeopardize some 58,000 direct and indirect jobs just in 2011 alone, and possibly cost more than 160,000 by 2020, warned Somerlyn Cothran, executive director of the National Stripper Well Association.

"If the president wants to help create jobs, why would he propose cutting thousands in an industry that pays two times the national average for manufacturing jobs?" Cothran asked.

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