Congressional tax leaders urged to back high-paying energy jobs

A coalition of 15 labor unions and the American Petroleum Institute urged congressional tax policy leaders to support proposals that would protect and encourage the development of high-quality US energy jobs while fortifying national energy and economic security.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Oct. 27 -- A coalition of 15 labor unions and the American Petroleum Institute urged congressional tax policy leaders to support proposals that would protect and encourage the development of high-quality US energy jobs while fortifying national energy and economic security.

Avoiding tax increases on the oil and gas industry is “not only good tax policy, it is good energy policy,” members of the Oil & Natural Gas Industry Labor-Management Committee said in Oct. 26 letters to the chairmen and ranking minority members of the US Senate and House’s major financial committees.

“As you begin consideration of legislation to address expiring tax provisions and other revenue issues, we urge you to avoid policies that could endanger jobs in the domestic oil and natural gas industry, an industry that is critical to both our energy and economic security,” Mark H. Ayers, president of the AFL-CIO’s Building and Construction Trades Department, and API Pres. Jack Gerard said in letters they jointly signed on the committee’s behalf.

One proposed tax increase, repeal of the federal tax code’s Section 199 tax exemption, would jeopardize $32 billion of planned US refinery modifications that would create more than 22,000 construction jobs and 3,000 permanent jobs, they told Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Minority Member Charles E. Grassley (R-Iowa), and House Ways and Means Committee Chairman Charles B. Rangel (D-NY) and Ranking Minority Member Dave Camp (R-Mich.).

The provision was enacted in 2004 as part of the American Jobs Creation Act to give US manufacturers a way to offset foreign government subsidies of the US firms’ overseas competitors, Ayers and Gerard noted in their letters. The proposed tax increase would make the exemption inapplicable to the oil and gas industry.

“Between 2005 and 2009, US refining capacity increased by a total of 547,000 b/d. Between 2001 and 2004, [it] increased by a total of 299,000 b/d. In other words, the rate of capacity expansion nearly doubled after the passage of Section 199,” the letters said.

They noted that the oil and gas industry supports 9 million jobs in the US, including thousands of building and construction jobs that support refinery modifications and expansions, pipeline construction, and fabrication of equipment used to produce domestic oil and gas.

The committee, which was formed in June, includes representatives of the AFL-CIO’s BCTD, which represents 13 national and international unions; the International Union of Operating Engineers; and the United Brotherhood of Carpenters and Joiners of America, as well as several oil and gas companies’ chief executives and the API.

Contact Nick Snow at nicks@pennwell.com.

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