The Alliance for a Strong Louisiana Economy (ASLE), which includes several petroleum groups, vows to "vigorously oppose" proposed higher taxes on a wide range of oil and gas operations in Louisiana.
The alliance, with headquarters in Baton Rouge, warns of harmful affects that would flow from passage of tax amendments to the Louisiana constitution. Jim Porter, president of Louisiana Mid Continent Oil & Gas Association, said the amendments would severely damage the industry's competitiveness and cost hundreds of millions of dollars in new investments and increased energy costs.
The proposed amendments are designed to levy a new tax on "processing" of oil and gas in Louisiana. In this context, processing includes everything from pumping and flow measurement to compression, dehydration, and other common practices.
The tax would apply to oil and gas produced in Louisiana or shipped in from federal offshore areas, other states, and other countries.
The proposed measure is worse than President Clinton's aborted BTU tax, Porter said.
"It is going to cause the price of virtually everything to increase. We will pay more for gasoline and utilities.
"Costs for feedstocks used by chemical plants will increase. In fact, everything that comes from or uses oil and gas will cost more."
ASLE estimates the new tax would cost the petroleum industry $1.2 2.1 billion/year, depending on which amendment is considered. Louisiana severance taxes amount to about $500 million/year at present.
"Contrary to claims by the proponents' authors, this tax cannot be passed on to people in other states and countries," Porter said. "Global competition will not allow it."
The Louisiana Senate defeated a similar measure proposed last year.
In addition to Louisiana Mid Continent, ASLE members include the Louisiana Chemical Association, Louisiana Independent Oil & Gas Association, Louisiana Ammonia Producers, and Natural Gas Association of New Orleans.
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