Senate Stands with the American People, Rejects Energy Tax Bill

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Jeff Eshelman / Julia Bell
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For Immediate Release
March, 30 2012

WASHINGTON – This week, President Obama addressed the nation urging Congress to turn their back on America’s oil and natural gas producers. From the White House rose garden, Obama stated that “members of congress have a simple choice to make. They can stand with big oil companies, or they can stand with the American people.”  

Yet, just hours after the President’s speech, the Menendez bill — legislation seeking to invoke billions in new taxes on American oil and natural gas producers — was rejected in the Senate by a vote of 51 to 47. While this decision may run counter to the President’s message, the Independent Petroleum Association (IPAA) believes the decision was right on point, and in line with the interests of the American people. IPAA President Barry Russell explains in  State Journal:

“Hopefully, today’s common sense vote in the Senate will end the Obama administration’s attempt to blame high gasoline prices on the oil and natural gas industry and the provisions that have encouraged massive new energy production and American jobs. The American people deserve solutions, not political posturing that will do nothing to help our nation meet our growing energy needs.” (State Journal, 3/29/12)

While the President consistently states that his energy policy targets profits made by ‘Big Oil’ and high gas prices, he instead threatens the thousands of small businesses responsible for producing the majority of our domestic oil and natural gas supplies, creating thousands of jobs and millions in revenue for government, while risking higher prices at the pump.

In fact, as the Wall Street Journal editorial board highlights, the oil and natural gas industry provides more revenue to the federal government than any source other than income taxes:

“President Obama says he wants to end subsidies for what he calls “the fuel of the past,” but lucky for him oil and gas will be the fuels of the future too. His budget-deficit blowout would be so much worse without Big Oil, because the truth is that this industry is subsidizing the government…’Not paying their “fair share’? Here’s a staggering fact: The Tax Foundation estimates that, between 1981 and 2008, oil and gas companies sent more dollars to Washington and the state capitols than they earned in profits for shareholders.”

And as the National Review highlighted earlier this week, threatening domestic production will only exasperate our gas price woes – and likely anger the nearly 70 percent of Americans who already disapprove of the President’s misguided approach to prices at the pump. With summer driving season approaching and an election in sight, we hope the President sees that standing with American energy production is standing with the American people when we need it the most.

Here’s what they’re saying around the nation:

Both sides frustrated as Senate rejects Menendez oil tax bill. Independent Petroleum Association of America Pres. Barry Russell, meanwhile, said following the vote: “Repealing the oil and gas industry’s provisions remains a centerpiece of the president’s energy agenda, as evidenced by his speech in the White House Rose Garden this morning. It is indeed understandable why nearly 70% of Americans, according to a new Reuters/Ipsos poll, disapprove of the president’s misguided approach to addressing gasoline prices.” (Oil and Gas Journal, 3/29/12)

The Future of Oil. If you want to find oil in the U.S., or a job, for that matter, head to North Dakota. The Peace Garden State is experiencing a remarkable oil boom in the midst of high gas prices, with production rising from 98,000 barrels a day in 2005 to more than 510,000 barrels by the end of last year–greater than the entire national output of OPEC member Ecuador. Thanks to shale oil in the Bakken formation, the petroleum workforce has risen from 5,000 in 2005 to more than 30,000 people. North Dakota’s unemployment rate is the nation’s lowest, 3.2%, and so many would-be roughnecks have flooded the state that workers are housed in temporary “man camps” like Wild West mining settlements. And North Dakota isn’t the only state benefiting from the boom. Texas is pumping oil at rates that haven’t been seen since the days of Dallas. “You can go straight to those fields and get a good-paying job,” says Scott Tinker, the state geologist of Texas. “The demand is there.” (TIME, 3/30/12)

The Anti-Energy President?. The policy of the Obama administration has been not to increase the energy supplies that are so critical to our nation’s economic health, but to limit them, to increase energy prices, and to make energy more expensive. Eliminating tax deductions for the oil and gas industries is at the top of the President’s list, which would increase the price of gasoline and home heating oil for everyone. But this fits in with the Obama administration’s overall inclination to hamper domestic production, whether through slowness in granting new permits or refusal to open new areas for exploration. In fact oil, production on federal lands was flat between 2009 to 2011, while production on nonfederal lands increased almost 7%.(Wall Street Journal, 3/29/12)

The Second Oil Revolution?. America is spending nearly a half-trillion dollars a year on imported oil — the greatest contributor to the massive annual U.S. trade deficit. We are also currently borrowing more than $1 trillion a year to finance chronic budget deficits, which in turn weaken the dollar and make oil imports even more expensive.But without the drag of high-cost imported oil, the economy would grow more rapidly, and that could shrink both trade and budget deficits — lessening somewhat the need for spending cuts and new taxes.(Patriot Post, Op-Ed, 3/29/12)

Natural gas, fueling an economic revolution?. The United States now has, at current consumption rates, at least 75 years’ worth of recoverable natural gas. More important, the United States has become the world’s low-cost producer of natural gas. That fact is already changing the future of U.S. manufacturing. (Washington Post, Op-Ed, 3/29/12)

Offshore Drilling Receives Twin Boost?. House Natural Resources Chairman Doc Hastings (R., Wash.) said Mr. Obama “is focused on trying to talk his way out of what he’s done, rather than taking real steps to boost American energy production.” Mr. Hastings said a more significant move would be to revive a planned oil and gas lease sale off the Virginia coast that was canceled in May 2010. (Wall Street Journal, 3/29/12)

Fracking Gas Is Writing America’s Energy Policy?. Much of what the United States might have achieved through a visionary energy policy—lower prices, lower carbon emissions, less reliance on dirty coal and foreign oil—is coming to pass as a result of abundant natural gas from hydraulic fracturing, said the recently retired CEO of one of America’s largest energy companies. (Forbes, 3/30/12)