The People of America's Oil and Natural Gas Indusry

Energy Today - May 11, 2011

Rayola Dougher

Rayola Dougher
Posted May 11, 2011

Press Connects: Gas Drilling Would be a Boon to Economy: In fact, many states within the United States have been successfully and safely using the hydraulic fracturing process for decades. These states, including Oklahoma and Pennsylvania, have been reaping state revenue and creating sustainable jobs while helping the United States reduce its dependence on foreign energy...t takes only a moment to summarize the economic and national security impact that results from hydraulic fracturing. During a time when the local economy is struggling and New Yorkers continue to face dead-ends with job searches, allowing hydraulic fracturing in the Marcellus Shale will generate more than $365 million in state and local tax revenue by 2020 and create 27,000 jobs for New Yorkers. By producing our own energy sources, we are weakening our dependence on energy from other countries. Taking the future of our energy out of the hands of violent and unstable countries in the Middle East and placing it into our own hands will secure our nation's economic future. WSJ: Washington vs. Energy Security: When President Obama introduced his energy plan in March, he pointed out that the U.S. keeps going "from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again." It's true that since the Nixon administration U.S. leaders have all made the same commitment to cutting our reliance on foreign oil, finding reliable sources of clean energy, and keeping energy prices low. Yet Americans keep hearing only short-term solutions and narrowly focused rules and regulations. The U.S. still imports more than half its oil, gasoline prices are at historic highs, and consumers are paying the price.

NY Daily News: In Defense of Big Oil: The Truth About Those Huge, Hated Earnings Numbers: Yet oil companies' profit margins - that is, the percentage by which their revenues exceed their costs - are quite low. From 2006 to 2010, the nation's five largest oil companies posted an average profit margin of 6.65%. By contrast, Apple's profit margin exceeded 22%, and Coca-Cola's surpassed 33%. Is anyone suggesting new taxes aimed at these companies? Of course, any jump in the price at the pump is bad news for families who need to fuel their cars to commute to work or go to the grocery store. However, the revenues reaped by oil companies can also translate into financial gains for those same families. When Exxon or Chevron has a good year, their larger-than-usual profits are often invested in new projects that grow the economy. The money is used to hire new employees, buy new goods and services from other businesses, research and develop new sources of energy and give raises to current employees.

Hot Air: Rooting Against the Home Team: ExxonMobil employs about 84,000 people directly worldwide (the oil industry in the US, both directly and indirectly is responsible for over 9 million jobs). In the US, that part of the total is 35,000. Now imagine if, instead of doing everything in their power to stand in ExxonMobil's way, the government actually did what the ExxonMobil representative lays out? The result would be as he concludes - more jobs, more revenue for government, and more opportunities in the works for both in the near future. Right here. Instead of that, however, we see government doing everything in its power to hurt the "home team".

Additional Resources:

Tax Foundation: Tax Policy Blog: Response to Senator Menendez Regarding "Tax Breaks for Big Oil"

KTVQ.com: Bakken Oil Boom Turning Heads and Profits in Williston Basin

NACS Online: How Much Does a Retailer Make on a Gallon of Gasoline? (NACS Explains)

ABOUT THE AUTHOR

Rayola Dougher is senior economist at The American Petroleum Institute (API), where she analyzes information, manages projects and develops briefing materials on energy markets and oil industry policy issues. She is the author or co-author of economic research studies covering a diverse range of topics including crude oil and petroleum product markets, gasoline taxes, energy conservation and competition in retail markets. In addition to testifying before federal and state legislators, she has participated in numerous newspaper, radio and television interviews on a wide range of issues affecting the oil industry, including crude oil and gasoline prices, industry taxes and earnings, exploration and production, and refining and marketing topics.

Prior to joining API, Rayola worked at the Institute for Energy Analysis where her research focused on carbon dioxide related issues and international energy demand and supply forecasts. Rayola holds a Masters degree in Economic Development and East Asian studies from the American University and a degree in History and Political Science from the State University of New York at Brockport.