John Bisney | 202.682.8114| bisneyj@api.org
WASHINGTON – API issued the following statement following the Senate Finance Committee passage of the “Energy Advancement and Investment Act of 2007”:
“While promoting alternative energy resources is a worthy goal, doing so by imposing new taxes on the U.S. oil and natural gas industry would actually work against insuring reliable and stable energy supplies for American consumers. According to the U.S. Department of Energy, the U.S. will consume 28 percent more oil in 2030 than in 2005, and 19 percent more natural gas.
“The new taxes in the Senate Finance Committee bill would increase our dependence on imported oil by discouraging new domestic production, discourage new investments in refinery capacity, and would lead to the loss of good-paying U.S. jobs.
“The Congressional Research Service concluded that the last time such taxes were imposed, in the form of the “windfall profits” tax between 1980 and 1986, domestic oil production dropped by as much as 1.26 billion barrels and oil imports increased by as much as 13 percent.
“A new ‘severance tax’ of up to 13 percent on production in the Gulf of Mexico, for example, would only serve to make those extremely expensive projects less competitive with foreign oil production.
“Compounding the error, other tax changes proposed in the Finance Committee bill would tilt the international playing field against U.S.-based oil and gas companies by potentially exposing them to double taxation on their foreign earnings, further reducing our nation’s energy security.
“The bill would also repeal the Sec.199 manufacturing deduction for the major oil and natural gas companies, which was designed to broadly create U.S. jobs. It has helped make oil and gas production and refining more globally cost-competitive, thereby increasing domestic energy production and reducing reliance on imports.
“In summary, the energy lost by taxing the U.S. oil and gas industry would outweigh any potential energy gained by developing alternatives. America doesn’t have the luxury to penalize one energy source at the expense of another. “
To request an interview with an API tax policy analyst or economist, please call our Media Relations Office at (202) 682-8114.
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