As prepared for delivery
Press briefing teleconference on State of the Union
Marty Durbin, API executive vice president
February 12, 2013
Good afternoon, everyone. Thanks for calling in.
During the presidential campaign last year, we were encouraged by the president’s strong commitment to oil and natural gas development as an essential part of his all-of-the-above energy strategy. We, therefore, look forward to hearing in tonight’s State of the Union speech how the president views the role of the U.S. oil and natural gas industry in meeting our shared energy and economic objectives.
Our industry is part of an energy revolution that has become an enormous asset to our nation’s recovery and economic future. Vast energy resources made available by advanced technology have opened the door to new oil and gas development that is putting more Americans to work, cutting imports, making U.S. businesses more competitive, spurring economic growth, and strengthening our energy and national security.
And we can do much more. We can be a major driver of a better energy future – an “all-of-the-above” energy future that can help lead the nation’s economy forward, achieving the goals of robust growth and full employment that the president has identified and will likely address this evening.
We share these goals, and hope to work with the president and his administration to make our nation more energy secure and stronger economically.
Oil and natural gas are foundational to our nation’s economy and to our industrial base. It provides most of the nation’s energy and supports more than 9 million jobs. And the industry contributes an average of $86 million a day to the federal government in income taxes, bonus bids, rental payments, royalties and other fees.
The industry is also a significant source of income to retirees, to government pension funds, institutions like colleges and universities, and many other Americans with investments in oil and natural gas stocks, including through IRAs and 401(k)s.
Keeping these benefits flowing is important to our nation, and through expanded investment and development in American energy we can not only keep them flowing, we can increase them.
There are three things the administration could do to help.
First, it could increase access for safe and responsible development of our oil and natural gas resources on federal lands and waters, and do more to streamline permitting and leasing in these areas. Eighty-three percent of federal land and offshore areas are still off limits to oil and natural gas development. And while oil and natural gas development on state and private lands has led to an overall increase in U.S. production, on federal lands and waters production is down.
Second, when it comes to taxes, singling out our industry for tax increases is bad economic policy, it’s bad tax policy, and it punishes one of the few industries that has created jobs and grown our economy throughout the economic downturn. We pay more than our fair share, and despite repeated allegations we receive no subsidies. We pay federal taxes at an effective rate – 44 percent – that is well above the 29-percent effective rate paid by the other S&P Industrials.
More important, raising taxes would undermine reaching our shared economic goals. The U.S. oil and natural gas industry invested $545 billion in the U.S. economy last year – an economic stimulus plan that happens every year, doesn’t require an act of Congress, and doesn’t cost the taxpayers a dime. Short-sighted, punitive tax proposals could put at risk those investments, diminishing what we can do for economic growth, sacrificing potential new jobs, and, paradoxically, sacrificing tax revenues that could come from new development and new jobs. And that lost domestic production could also mean more imports, undermining our energy and national security.
We have a graph we’ll send, based on research conducted for us by Wood Mackenzie, that illustrates the huge potential loss of revenue from increasing the industry’s taxes. There’s an initial short-term uptick in revenues, but after about five years the revenue falls below the baseline and the losses keep increasing.
Third, the administration should approve the Keystone XL pipeline, which would immediately put thousands of Americans to work while also expanding the infrastructure to bring secure supplies of Canadian oil to state-of-the-art U.S. refineries and to American consumers.
One last point. It’s important to recognize that our industry is part of the solution when it comes to the environment. Our members are major investors in low- and zero-carbon technologies, outspending the federal government and spending almost as much as the rest of the private sector combined.
Increased use of natural gas is also the primary reason U.S. carbon emissions are now at 1992 levels, and we continue to see improvements in energy efficiency and air quality.
America has a game-changing opportunity on energy. We can lead the world, become more self-sufficient, and further reduce imports. At the same time, we can benefit American workers, businesses, farmers, retirees, and our federal government in the form of hundreds of billions of dollars in new revenue.
We look forward to the president’s address this evening – to hearing his views on where he hopes to take the nation. And we’re ready to work with his administration to help bring our economy back, reducing unemployment and the nation’s debt.
We believe our future is bright, and that our industry has a critical role to play, and a duty to safely and responsibly produce our energy resources. We are an innovative, high-technology industry that stands ready to create more well-paying jobs, further grow the economy, enhance our energy security and provide significant revenue at all levels of government.
And, with that, I am happy to take your questions.