The People of America's Oil and Natural Gas Indusry

Politics Trump Common Sense

Jane Van Ryan

Jane Van Ryan
Posted September 17, 2010

Do you know the definition of piling-on? It's the phenomenon that occurs when several actions or events land on your shoulders all at once. While the weight of the pile usually isn't insurmountable, it can be challenging and often makes one wonder about the motivations of those who add to the heap.

The oil and natural gas industry has been experiencing a situation in which the government seems to be engaging in piling-on. During the past several days:

  • The administration announced a plan to sharply raise the fees for offshore rig and platform inspections;
  • The president announced an infrastructure rebuilding program to be funded by higher taxes on the oil and natural gas industry;
  • The president asked Congress to permanently cancel $50 million for a deepwater drilling research and development program;
  • The administration ordered oil and natural gas companies to permanently shut-in offshore wells that aren't producing energy;
  • The Senate considered an amendment to repeal a tax deduction available to all manufacturing firms from the five largest oil companies. Fortunately, the amendment was rejected, but the provision's sponsor is promising to bring it up again; and
  • All of this is occurring on top of the deepwater drilling ban and new offshore requirements that have brought Gulf drilling to a near standstill.

While actions like these might be viewed favorably by industry critics especially during an election cycle, the long-term impacts are likely to be quite damaging to all Americans.

The U.S. Department of Energy's Energy Outlook shows that oil and natural gas account for about 61 percent of the energy used in the United States today and will account for about 56 percent in the future (2035). Considering that overall energy demand is predicted to rise by 14 percent, it's clear that America will need more oil and natural gas, not less.

So why are government officials piling-on new regulations and requirements that could discourage domestic oil and natural gas production? It appears that politics is trumping common sense.