As prepared for delivery
Press briefing teleconference on new tax ads
Jack Gerard, API President and CEO. Monday, November 7, 2011
Opening statement:
Good morning everyone. Thanks for calling in.
As the Nov. 23rd deadline for Super Committee draws near, we want to take every opportunity to reinforce that the oil and natural gas industry represents a big part of the solution as the Super Committee seeks to address deficit reduction. We're one of the few industries that has created jobs throughout the recession, generates about $86 million per day in federal revenue and could do much more of both with the right policies.
Unfortunately, we continue to hear suggestions from some in Congress and elsewhere that our industry should be singled out for tax increases. This makes no sense. Increasing taxes on our industry would put a big speed bump in front of the very activities – creating jobs increasing government revenue – that we should be encouraging. It's a bad idea.
Our critics' calls are based on the false premise that our industry gets special treatment and doesn't pay its fair share. The facts tell a far different story:
- We pay more in total corporate taxes than any other industry sector
- Our effective tax rate in 2010 averaged 41.1% ... compared to 26.5% for the other S&P Industrials
- Our tax provisions are no different than the normal business deductions and cost recovery mechanisms widely used throughout the economy to call them is both inaccurate and misleading.
And it doesn't end there. In 2010 we directly contributed more than $470 billion to the US economy in spending, wages and dividends – more than half the size of the 2009 stimulus package. But this stimulus happens every year without an Act of Congress and at no cost to taxpayers. Again, the kinds of activity our government should be encouraging.
And who benefits when our industry is successful? If you're invested in pension funds, IRAs and mutual funds, chances are YOU do. A strong oil and natural gas industry is a vital part of retirement security for millions of Americans.
We have been delivering these messages all year through a comprehensive advocacy and communications campaign. As a next step we'll begin running a new ad campaign, starting tomorrow, that recognizes some of the Super Committee members who have opposed efforts to raise energy taxes. We will provide you with links to the new ads immediately after this briefing.
We're ready to do our part. When Congress is prepared to address comprehensive tax reform, our member companies are prepared to be constructive partners in finding solutions that will treat all businesses fairly while providing opportunity to remain competitive.
In the meantime, a study by Wood Mackenzie conducted for us earlier this year shows that with pro-development energy policies the oil and natural gas industry could generate $36 billion in revenue over the next four years and a full $800 billion by 2030 through lease sales, royalties, production fees and taxes. Further, these policies could create 1 million jobs in just seven years.
Raising taxes only on oil and natural gas companies is not a serious strategy to deal with deficits or a slow economy. In fact, over the longer term, higher taxes would actually mean less revenue to the government because development and production would be reduced, which would reduce taxable income and royalties while increasing our reliance on imported energy.
We stand ready, willing and able to be a critical part of our budget, energy and economic challenges. But policy matters, which is why we must challenge some of the ill-conceived advice being given to the super committee.
Now, I'd be happy to answer your questions.