Better Policy Can Help Produce a Better Energy Future (DEPA July 2011)

Better Policy Can Help Produce a Better Energy Future

Edward Cross, President

Kansas Independent Oil & Gas Association

The Obama Administration has been trying to eliminate the small independent oil and gas

industry’s primary tax provisions (percentage depletion and IDC’s) ever since they took office in

2009. Recently, the President has stepped up the rhetoric against the oil and gas industry using

the same tired old arguments we have been hearing the last two years. The federal government

by no stretch of the imagination subsidizes the oil and gas industry.

During the give and take of public discourse, few truly stop to think how absolutely

essential oil and natural gas are to our lives, to our prosperity and security, and to our future. Oil

and natural gas are the foundation of our energy-dependent economy. They profoundly affect

how we live and work. They are key to our mobility, to keeping our homes and businesses

warm, to providing us with electric power, and to supplying the raw materials for countless

consumer and industrial products.

Nationally, oil and natural gas supply 63% of the nation’s energy today and represent

more than $1 trillion of U.S. economic activity, accounting for some 7.5% of U.S. GDP –

helping make our economy the biggest in the world. And, just as important, oil and natural gas

are putting huge numbers of Americans to work. The oil and natural gas industry supports more

than 9.2 million U.S. jobs, a job base that even with the assumed maturity of this industry is

surprisingly dynamic and growing and has the potential for more growth. In Kansas alone, the

oil and natural gas industry supports over 67,000 jobs and $2.7 billion in family income. In areas

where oil and natural gas are found in Kansas, the industry represents 25% of the jobs in some

counties.

The oil and natural gas industry is one of the nation’s premier job creating engines today

and has the potential to expand that role tomorrow, provided our public policymakers understand

the future as well as present breadth and significance of oil and natural gas to our domestic

economy. We seek no handouts and need no stimulus - just opportunity.

Opportunity that is, which is supported by sensible energy policy. Some of the policies

advanced over the last year seemed aimed at chilling the job creation potential of domestic oil

and natural gas development. Proposals to eliminate important oil and gas tax provisions,

impose federal regulation of hydraulic fracturing, and impose restrictive air emission and GHG

regulations would serve only to depress investment in new domestic oil and natural gas projects,

weaken the nation’s energy security, and make it more difficult to achieve economic recovery.

Americans are skeptical of such proposals. They have concerns about lost jobs and

higher energy costs. About new taxes. About shifting energy production out of the country.

And about ultimately pushing the costs on to consumers.

Americans support developing our plentiful domestic energy resources and believe that

can be done in a way protective of our environment. They value a future where we take

advantage of all forms of energy. And they value a future where we encourage domestic

development to generate the jobs that will put them to work as well as supply the energy to help

secure our economy, allowing it to thrive in the years and decades ahead.

The opponents of American energy development have shown a propensity to align

themselves rhetorically with public sentiment even as they consistently espouse policies that

would put that goal farther and farther out of reach. History has shown that increasing taxes on

oil and natural gas development negatively affects consumers, businesses, and the economy.

Imposing new federal regulations, like hydraulic fracturing, when the procedure is already wellregulated

by the states will not put America on a path of preparing for its real energy future.

Imposing burdensome and restrictive air emission and GHG regulations will not ensure

Americans have ample supplies of the oil and natural gas that every projection shows they will

be demanding in the near future.

We need to get to work doing the right things for a better energy future. Better policy

can help produce a better energy future looking ahead. If we as a nation are serious about new

jobs, if we want to stimulate our economy, if we want to constructively increase revenues to

federal, state, and local governments, which could be used to build roads, fund schools, support

communities, or battle deficits, we clearly have the means of doing so.

Most Americans understand this. They want more jobs. They want more affordable and

reliable energy. It’s time to move policy in that direction.

Better Policy Can Help Produce a Better Energy Future

Edward Cross, President

Kansas Independent Oil & Gas Association