Increased access to domestic oil and natural gas -- rather than increased taxes on the U.S. oil and natural gas industry -- is the best strategy for increasing government revenue, jobs and energy production, a new study by Wood Mackenzie concludes.
“U.S. oil and natural gas companies are a major force in our economy and, with the right policies in place, could drive even greater economic benefits,” said API President and CEO Jack Gerard, during a “State of American Energy” address in Washington today. “These companies produce most of the nation’s energy, put millions of people to work and deliver billions in taxes and royalties to our government. The study shows increased access to areas currently off-limits would create jobs, grow the economy and dramatically increase revenues to the Treasury, at a time when the U.S. deficit is of national concern.
“We urge the Congress and the administration to promote energy policies that will aid our economic recovery and reduce our debt. This study shows increased taxes would take us backwards.”
Increased access could (by 2025) create 530,000 jobs, deliver $150 billion more in tax, royalty and other revenue to the government, and boost domestic production by four million barrels of oil equivalent a day, according to the Wood Mackenzie study, “Energy Policy at a Crossroads: An Assessment of the Impacts of Increased Access versus Higher Taxes on U.S. Oil and Natural Gas Production, Government Revenue and Employment.” Raising taxes on the industry with no increase in access could reduce domestic production by 700,000 barrels of oil equivalent a day (in 2020), sacrifice as many as 170,000 jobs (in 2014), and reduce revenue to the government by billions of dollars annually. An additional 1.7 million barrels of oil equivalent a day in potential production that is currently of marginal economic feasibility would be at greater risk of not being developed under the modeled tax increase.
On access, the API-sponsored study assumes the Eastern Gulf of Mexico, portions of the Rocky Mountains, the Arctic National Wildlife Refuge, and the Atlantic and Pacific Outer Continental Shelf would be opened to development. On taxes, it assumes a $5 billion increase in annual taxes on the industry, which is less than the amount considered last year by the U.S. Congress and the Administration.
In conjunction with the Gerard address today, API also issued a “State of American Energy” report, which analyzes the U.S. oil and natural gas industry’s role in building a stronger economic and energy future for our nation through safe and reliable production of domestic energy resources. It shows the industry can do much more to help with economic recovery, job growth and increased revenues to the government. The findings in the report complement the Wood Mackenzie study and note the critical importance of sound energy policy to achieving the benefits of expanded energy development.
API represents more than 450 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports more than 9.2 million U.S. jobs and 7.5 percent of the U.S. economy, and, since 2000, has invested nearly $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.