API Chairman J. Larry Nichols testifies on proposed tax hikes

WASHINGTON, September 10, 2009 - API Chairman J. Larry Nichols told Congress on Thursday that the Obama administration’s $80 billion tax increase on America’s oil and natural gas industry is based on myths and would result in less oil and natural gas for consumers, higher energy costs and kill jobs at a time when the nation’s economy needs all the help it can get.

“These proposals are based upon myths rather than fact - reaction rather than considered reflection,” said Nichols, chairman and chief executive officer of Devon Energy Corp., an independent oil and natural gas company.

Nichols made his remarks in testimony to the Subcommittee on Energy, Natural Resources and Infrastructure of the Senate Finance Committee.

“The stark reality is that these proposals are anti-jobs, anti-consumer and anti-energy,” Nichols added. History has shown that increasing taxes on the oil and natural gas industry negatively affects consumers, businesses and the economy. “They will depress investment in new domestic oil and natural gas projects, weaken the nation’s energy security and make it more difficult to achieve economic recovery.”

A recent study by PricewaterhouseCoopers found that the oil and natural gas industry supports more than 9 million American jobs and makes significant contributions to the nation’s economy. The study found that the industry’s total value-added contribution to the national economy was more than $1 trillion, or 7.5 percent of gross domestic product in 2007, the most recent year for which data was available.

Nichols noted that the tax proposals would even undermine the administration’s desire to transition to a cleaner energy future by discouraging the development of natural gas resources. “This counter-productive approach is at odds with the administration’s own carbon-reduction policy because it would discourage production of natural gas, our cleanest fossil fuel,” he said.

Noting that America needs to develop all sources of domestic energy, Nichols called lawmakers to adopt policies that “reflect the realities of America’s energy challenges. We need a multi-pronged approach that includes renewable energy, increased energy efficiency and oil and natural gas. It is clear to me that crippling an important sector like ours is wrong.”

Updated: September 16, 2009