Apr 10, 2013 U.S. Oil, Gas Producers Respond to President Obama’s 2014 Budget Proposal
President Obama released today his final budget for 2014. In response, Independent Petroleum Association of America Chairman Virginia Lazenby, who is CEO of Nashville-based Bretagne, LLC, released the following statement:
“President Obama’s 2014 budget demonstrates a fundamental misunderstanding of the American oil and natural gas industry and its tax treatment. Its call to repeal the industry’s tax ‘subsidies’ mischaracterizes the industry’s tax provisions and disregards the way the tax code has influenced energy development for decades.
“Independent oil and natural gas producers currently reinvest 150 percent of their capital budgets into new energy projects, and by doing so, they keep the economy moving. The tax treatment is crucial to the business decisions of these companies.
“If the President’s budget proposal was enacted, independent oil and natural gas producers, who drill 95 percent of the nation’s wells, would reduce their capital investments by up to 25 percent. This means fewer jobs, less revenue to government treasuries, and a halt to the progress our nation has made toward achieving energy security. America’s oil and natural gas revolution – one of the few bright spots in our slow economy – is at risk.
“What the President calls ‘subsidies’ are neither loopholes nor subsidies but business deductions, congruent with those received by many U.S. industries from accounting to manufacturing. These provisions enable independent producers to take on the risk and gain access to the major capital investment necessary to explore and produce American natural gas and oil.
“The activities of the oil and natural gas industry generate enormous revenue for federal, state, and local governments. If the President is serious about creating a responsible budget plan, a tax hike that curtails additional revenues should not be on the table.
“The President’s budget also outlines a series of royalty and fee increases, as well as policy changes that will make it harder for independent producers to operate on federal lands. The administration claims to support oil and natural gas development on federal lands, but the proposed list of increased fees, royalties and regulations will only make it more burdensome for small producers to operate on federal lands and waters.
“The American oil and gas industry is one of the few beacons in a lackluster economy. The President’s budget claims it would make America a ‘magnet for jobs,’ but raising taxes, royalties and fees on the American oil and natural gas industry would surely decimate job creation. This budget throws a wrench in the great energy revival that is transforming local and state economies across the country – a revival that has been spearheaded by America’s independent producers.
“If the President wants to attract more jobs to U.S. shores and jumpstart the economy, he should encourage oil and natural gas production by expanding access to vast reserves.”
IPAA is committed to educating lawmakers, the media, and the public about the importance of these tax provisions for independent producers and for the health of the U.S. economy. Tomorrow, IPAA will be launching a new resource, www.EnergyTaxFacts.com, for those engaged in the tax debate. Stay tuned for more information.