Higher Taxes Harm U.S. Energy Production

Jane Van Ryan
Posted April 8, 2010

As J. Hunt Perkins points out in a Lexington Herald-Leader op-ed, there's something wrong with an energy policy that promotes offshore drilling but at the same time, proposes to place higher taxes on the oil and the natural gas industry.

Perkins, a petroleum geologist, says that the tax hikes in President Obama's proposed 2011 budget are not only counterproductive, but they also are punitive. He argues that several long-standing tax incentives, which would be cut under the budget, were designed to encourage production of domestic energy resources and should be retained.

Perkins points out that without incentives, new oil and natural gas investment could be reduced by 20 to 40 percent, U.S. oil production could be lowered by 20 percent, and natural gas production could decline by 12 percent, according to the Independent Petroleum Association of America (IPAA).

Perkins adds that the loss of the incentives could destroy "thousands of jobs":

"The president cannot have it both ways. He cannot call for an effort to create more jobs in the oil, gas and coal industries while calling for the elimination of the tax incentives that would provide the very financial means to fuel this effort...Oil, gas and coal resources provide a huge percentage of our nation's energy needs. It is essential that our national energy policy fairly balance the tax treatment of all forms of energy generation..."

Perkins closes by saying that it's "imperative that we assist, not penalize" America's energy industries. For more information, read the full op-ed.