Once again Washington is talking about cutting tax benefits to the oil and gas industry. Before any politician considers this he should take a close look at the positive effects the domestic oil and gas industry has on our economy inspired by the so called “tax loophole”.
According to a new report by PricewaterhouseCoopers (PwC), the U.S. oil and gas industry provides more then 9 million American jobs as well as significant economic contributions as employers and purchasers of American goods and services.
The PwC study reports that the oil and gas industry’s total value-added contribution to our national economy was more then $1 trillion in 2007 (the most recent year for the study). That was 7.5% of the U.S. gross domestic product. Over the last 3 years, the industry has seen significant growth. I would estimate these numbers to grow at least 25% or higher in 2010.
PwC states that, “The economic impact of the oil and natural gas industry reaches all 50 states and the District of Columbia….” “The top 15 states, in terms of the total number of jobs directly or indirectly attributable to the oil and natural gas industry's operations, were Texas, California, Oklahoma, Louisiana, New York, Pennsylvania, Florida, Illinois, Ohio, Colorado, Michigan, Georgia, North Carolina, Virginia and New Jersey.”
Congress and the President must keep the study’s findings in mind as it debates greater domestic oil and gas access, higher energy taxes and so called tax loopholes.
API President Jack Gerard said, “Congress should remember, that some of the energy tax and climate change legislation it has proposed would have a devastating impact on the industry and many of the 9.2 million American jobs it supports, as well as on the American economy and energy security.”
“The people in the U.S. oil and natural gas industry are the backbone of our economy,” Gerard said. “They provide most of the nation’s energy, spurring growth and job creation across America. At a time of economic recession, the oil and natural gas industry is actually responsible for creating more jobs and generating more revenue to the economy. Irresponsible proposals to pile new taxes on the industry threaten these jobs and the nation’s ability to produce more of its own energy. We should not put any jobs at risk, but especially not when millions of Americans already are unemployed and economic recovery remains uncertain.”
Anyone that has actually looked into the so called “tax loopholes”, found in section 469(c)(3) of the Tax Code, will quickly see that it is one of the most successful methods of inspiring domestic oil production that congress has come up with. This portion of the code does not provide loopholes to major oil companies but rather to independent oil producers. There is a significant difference.
According to the Independent Petroleum Association of America, independent producers account for 90% of oil and gas wells in America. These tax advantages stimulate high risk investment of oil exploration by mitigating some of the financial risks—creating jobs and driving the economy.
These are not tax loopholes; this is a smart move with a direct contribution to domestic oil and gas production, having a positive impact on our economy, our jobs and our way of life: reducing our dependence on foreign oil and strengthening America.
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