Sep 8, 2011 IPAA Responds to President Obama’s Job Plan: Fails to Recognize American Oil, Gas Importance in Job Creation and Role in Infrastructure Development
WASHINGTON, DC – In remarks this evening before a Joint Session of Congress, President Obama repeated his interest in raising taxes on oil and natural gas companies as a means of addressing the federal deficit. In response, Independent Petroleum Association of America (IPAA) President and CEO Barry Russell released the following statement:
“It is unfortunate that, at a time of historically high unemployment and nominal economic growth, the President would once again propose raising taxes on America’s oil and natural gas producers. “The President’s recommendations for improving transportation and the nation’s infrastructure fail to recognize the energy required to make these programs successful. It will require oil and natural gas — which should come from American resources. Instead, he calls for taxing our nation’s oil and natural gas industry, one of the few industries that actually is creating jobs today.
“Contrary to popular belief, the tax proposals laid about by the President would not chiefly impact ‘Big Oil,’ but rather the 18,000 independent oil and natural gas producers in the United States who on average employ only 12 workers. These companies drill 95 percent of the nation’s oil and natural gas wells and account for 67% of total domestic production of these resources.
“The oil and natural gas industry as a whole generates more revenue for the federal government than any source other than income taxes, paying an effective federal rate of 48% plus substantial state and local taxes. In fact, a recent study by IHS Global Insight showed that independent producers could generate $930 billion for state, local, and federal governments in the form of taxes, rents, and royalties over the next decade, as well as support the creation of approximately 900,000 new jobs. The President’s proposal to raise taxes, however, would only generate an estimated $30 billion, while also crushing jobs and significantly weakening America’s ability to produce its own energy.
“If the President is truly interested in reducing the deficit and creating jobs, he needs to recognize the important role that independent producers can continue to play in fueling a short-term recovery and a long-term revitalization of America’s struggling economy. Calling for a series of shortsighted tax hikes, however, will move this country in the opposite direction, and will result in fewer American jobs, larger deficits, and an even greater dependence on foreign, unstable regions to meet our growing energy needs.”