As prepared for delivery
Conference call with Jack Gerard, API President and CEO
November, 30, 2011
Thank you for joining this call this morning.
I wanted to take this the opportunity to again highlight the critical role America's oil and natural gas industry plays in our economy and how we can do even more for American workers and families through the safe and responsible production of additional domestic resources.
We have reiterated this message repeatedly to Congress, the administration, to the millions of voters in our grassroots network, and to the general public through advertising.
Yet, some people still don't get it. And, some have resorted to various antics to distort the facts about our industry's ability to create jobs, to provide an economic stimulus to oureconomy, and increase revenues to the federal government.
We're here today to clear up any confusion that was raised recently in a letter to API by Congressman Edward Markey, ranking member of the House Energy and Natural Resources Committee.
His letter illustrates the typical misunderstandings about important industry facts and how that misunderstanding can lead to public policies that hinder, rather than help, job creation and economic growth.
In my letter today, I reiterated to Congressman Markey what we have been communicating to Congress all year, from our January State of American Energy event, to our "Keys to the Future" campaign over the summer and our Jobs Summit on Capitol Hill just after Labor Day, when we released an important report from Wood Mackenzie that found that with the right policies from Congress and the administration, we could create 1.4 million new jobs in America by 2030, with one million of those jobs created in the next seven years. The same study found we could generate $36 billion in government revenue in just the next four years and a full $800 billion by 2030, through increased investments in domestic energy resources.
The fact is the job creation numbers from this study are conservative.
Wood Mackenzie assumed a multiplier of 3.5 (2.5 indirect and induced jobs for every direct job created), compared to the far more aggressive multipliers for the oil and natural gas industry from the 2008 IMPLAN Database of 4.4 to 6.9, which are based on the Bureau of Economic Analysis's input/output industry tables.
Congressman Markey and other critics now appear to be calling into question the very use of multipliers to project job impacts. Not only is this concept accepted by almost all mainstream economists, but Dr. Wassily Leontief won a Nobel Prize for developing the input/output methodology that includes this effect. In fact, most recent estimates of jobs impacts, including estimates of the administration's recent jobs proposal, include direct, indirect and induced effects in their calculations. The critical point is that indirect and induced jobs created by the oil and natural gas sector are real jobs that will employ real Americans.
And, as the Wall Street Journal editors recently noted, "[The] beauty of the oil and gas boom is that multipliers aren't needed to predict job growth. It's happening right before our eyes".
For example, in North Dakota, oil and natural gas production has led to the nation's lowest unemployment rate (3.55 percent) and thousands of job openings. Or in Pennsylvania, where Marcellus shale development has produced not just lower energy prices for families and businesses, but more than 72,000 jobs in the last two years.
It's also worth noting again that our industry invested more than $470 billion in the U.S. economy in 2010 in capital investment, wages, and dividends – that's more than half the federal stimulus package enacted by Congress in 2009, yet it happens every year and doesn't require an act of Congress.
In our letter today, we also reminded Congressman Markey that the oil and natural gas industry does not receive tax "subsidies". A subsidy is a payment from the government to a company or individual and we receive no such payments. There are provisions in the tax code that allow U.S. companies, including oil and natural gas companies, to recover business expenses. Nevertheless, at over 41 percent, in 2010 the oil and natural gas industry paid one of the highest effective tax rates in the U.S. (other S&P Industrials paid an effective tax rate of 26.5 percent). It is difficult to reconcile the notion of our industry receiving tax "preferences" when we pay an effective tax rate 50 percent greater than other sectors.
So, again, we welcome the opportunity to ensure that the U.S. oil and natural gas industry's significant role in stimulating overall economic growth is not overlooked.
We welcome a public debate on creating more jobs for Americans, because we know that increased activity in the oil and natural gas sector will have positive impacts on other sectors of the economy through investments related to oil and natural gas operations such as equipment, raw materials and services.
And we are encouraged by members of Congress who are focusing on the number one priority in America today: job creation. And I have invited Congressman Markey to be my guest at the 2012 State of American Energy luncheon, planned for early January. During that event, I will outline our plan to not only create more jobs in America, but to grow our economy, strengthen our energy security, and generate more revenues to the federal government.
With that, I'm happy to take your questions.