Jan 26, 2011 Raising taxes on American oil and gas producers will fundamentally undercut our nation’s long-term energy security objectives and raise energy costs for consumers
WASHINGTON – In his State of the Union address last night before a joint session of Congress, President Obama renewed his call to hike taxes on America’s independent oil and natural gas producers, who on average employ just 12 workers while drilling 90 percent of the nation’s wells. In response, Bruce Vincent — president of the Houston-based Swift Energy Company (NYSE: SFY) and chairman of the Independent Petroleum Association of America (IPAA) — issued this statement:
“The President is absolutely right, ‘our free enterprise system is what drives innovation.’ The foundation of a remarkable free enterprise system – the most powerful job, wealth and prosperity machine ever known – is our nation’s access to affordable and reliable energy resources, particularly oil and natural gas.
“Sadly, though, the President – rather than working to further bipartisan policies that encourage the responsible development of America’s abundant, job-creating oil and natural gas reserves – renewed his misguided call to levy massive amounts of job-crushing tax increases on the backs of independent energy producers, who are overwhelmingly small business owners. Billions of dollars in new taxes on the American oil and gas industry, despite what the President asserts, will fundamentally undercut our nation’s long-term energy security objectives, and will put into jeopardy tens of thousands of good-paying jobs and thousands of small businesses.
“Like so many other small businesses across the nation, that are truly the backbone of our economy, independent oil and natural gas producers reinvest up to 150 percent of their cash flow toward hiring, purchasing and maintaining equipment, drilling wells and asset acquisition. The federal tax code has for decades addressed the ordinary and necessary expenditures associated with oil and natural gas development and provided a stable framework to encourage these common sense investments, aimed at increasing supplies of American energy and job creation here at home. The President’s massive tax hike proposal – which was soundly rejected by Democrats and Republicans on Capitol Hill last Congress – would cripple our industry’s ability to compete, leaving struggling American consumers more vulnerable to unstable energy prices at the pump and in their homes, and deepening our nation’s dependence on often unfriendly region’s of the world to fuel our economy, which will further worsen our balance of trade.
“While we are encouraged that the President underscored the critical and growing role that American natural gas resources continue to play in our energy future, a basic disconnect exists. By and large, American independent natural gas producers are also America’s oil producers. As such, raising taxes on our industry – putting the government, not the free enterprise system, in our energy economy’s driver seat – will undercut the production of clean-burning natural gas, and the tens of thousands of jobs associated with this production. Not only would this move devastate small oil and gas producers, but the damaging effects will ripple through the entire U.S. economy – hitting the oil and gas service and supply companies, as well as the entire manufacturing base due to an increase in energy and feedstock costs, consequences that damage America’s ability to compete in the world economy.”