The US oil and gas industry potentially could make a significant positive contribution to federal fiscal negotiations if the administration of reelected President Barack Obama adopts sensible policies, according to American Petroleum Institute Pres. Jack N. Gerard.
The industry still strongly opposes punitive legislative proposals, but would eagerly join discussions where all special tax provisions are on the table to possibly reduce the corporate tax rate, Gerard told reporters during a Nov. 8 teleconference.
"Independent analysis shows this industry could generate billions of dollars of additional federal, state, and local government revenue," Gerard said. "A recent IHS report suggests it could be trillions. Allowing us to do what we do best will not only lead to thousands or hundreds-of-thousands of new jobs, but also would generate billions or trillions of dollars in new revenue."
His observation came one day after US House Speaker John A. Boehner (R-Ohio) said results of the Nov. 6 elections show voters want more cooperation than confrontation from federal lawmakers.
"There is an alternative to going over the fiscal cliff, in whole or in part," Boehner said on Nov. 7. "It involves making real changes to the financial structure of entitlement programs, and reforming our tax code to curb special interest loopholes and deductions.
"By working together and creating a fairer, simpler, cleaner tax code, we can give our country a stronger, healthier economy," he maintained.
Revenue generator
The federal government already receives $83 billion/day in revenue from oil and gas development and production on public acreage onshore and offshore, Gerard noted. "If policymakers want to look at a positive revenue source, they only have to look at oil and gas production on federal land," he said. "That's a contrast with proposals to increase taxes on our industry."
Gerard said he does not expect a comprehensive federal tax reform conversation to occur before 2013, and that it possibly will extend into 2014. How Congress and the administration grapple with ways to avoid budget sequestration and its potential disruptions on Jan. 1 will be the primary focus in the next few weeks, Gerard said.
"We are willing to have a conversation with everyone around the table about how to bring the corporate tax rate down, and discuss the provisions we have," he said. "We oppose proposals directed at our industry which would raise taxes and increase costs. The oil and gas industry should not be singled out for punitive treatment."
The administration could take immediate steps in the meantime to illustrate that it truly supports more domestic oil and gas development as part of its overall energy strategy, Gerard continued.
He said these might include expedited approval of the Keystone XL crude oil pipeline project; taking a closer look at how states already regulate oil and gas activity before imposing duplicative, redundant rules; and reexamining 2007 Energy Independence and Security Act mandates, which clearly aren't working.
"We are going to give the president the benefit of the doubt," Gerard said. "He has evolved on the oil and gas issue and strongly supports more domestic production. He has said he believes it should be part of his overall energy strategy. We'll take him at his word for now."
