As prepared for delivery
Press briefing teleconference on new tax ads
Khary Cauthen, API federal relations senior director
Monday, November 12, 2012
Good morning everyone. Thanks for calling in. With the election over, policymakers are beginning to focus on the challenge of America’s budget and the “fiscal cliff.”
As the recent election campaigns demonstrate, Americans are paying attention to energy issues. Taxes on the industry are a key energy issue, and, as our Election Day polling showed, voters are skeptical about targeting the industry for higher taxes.
Today, to encourage members of Congress who are part of that conversation with voters, we’re launching new television and print advertising inside the beltway and in selected states.
The ads help make our point that discriminatory tax treatment of the oil and gas industry is a bad idea. Higher taxes can keep us from doing what we can do to help the economy, jobs, energy production, and, over the long term, even the revenues our industry provides to government.
During the election campaign, President Obama said he’s committed to more domestic oil and natural gas development. More development would be good for the economy because of the ability of America’s oil and natural gas industry to create jobs. We’re one of few industries that created large numbers of them during the recession.
And there’s potential for additional, massive new investment in domestic oil and natural gas development, which could create even more jobs. The International Energy Agency announced yesterday that America has sufficient oil reserves to become the world’s number one producer by the end of the decade.
However, with new taxes, U.S. oil and gas projects are less attractive and foreign projects more attractive. That’s an invitation to push American investment and jobs overseas. Studies, including analysis prepared for us by Wood Mackenzie a year ago, back that up.
Taxes on domestic oil and gas companies would limit new U.S. jobs and, over the long term, also would reduce the revenue U.S. oil and natural gas corporations and U.S. workers deliver to our government. They also would reduce domestic production, which could increase our nation’s reliance on imports and worsen our trade deficit.
But targeting our industry for tax hikes is also based on a mistaken assumption: that we don’t pay our fair share of taxes and are heavily subsidized.
In fact, we pay more in corporate taxes than any other sector. And we pay at higher effective tax rates. We deliver more total revenue to the government.
And we don’t receive subsidies. We get deductions, used to recover costs that encourage investment in more U.S. projects. These deductions are identical or similar to deductions for business expenses that are common place among virtually every other business and industry in the United States.
Oil and natural gas companies now generate about $86 million per day in revenue to the federal government.
And their effective tax rate over the past six years through 2011 has averaged 44.3 percent, well above the 35 percent general corporate tax rate – and well above the rates of most other industries and businesses.
We are encouraged by the willingness of some members of Congress to listen to voters who understand that raising energy taxes would be bad for everyone, because it could raise consumers’ costs. We’re using our meetings with lawmakers – and this new series of advertisements – to recognize those members who understand the harmful impacts of punitive tax measures.
The oil and natural gas industry is already an engine of revenue for our nation, and it’s ready to do its part under broader tax reform. Targeted additional taxes on oil and gas are the wrong approach for what’s needed to rebuild our economy and get our fiscal house in order.
More energy development produces more jobs, revenue and energy. More taxes produce less of all three.
Thank you. Now, I’d be happy to answer your questions.