The People of America's Oil and Natural Gas Indusry

Energy Today - June 2, 2011

Rayola Dougher

Rayola Dougher
Posted June 2, 2011

Fort Worth Star-Telegram: Hiking Taxes on Big Oil Won't Produce More Energy: Hiking taxes on the oil industry at present makes no sense, especially with the economy still in recovery mode. Higher costs on energy producers would simply be passed on to consumers, further eating into their limited disposable incomes. Seniors, low-income households and small businesses would be hit the hardest. These taxes would also siphon off capital that might otherwise be spent on exploration and production while creating thousands of new jobs. What's more, most tax subsidies are no longer available to Big Oil and would fall primarily on small and medium-sized oil and gas companies...America is an energy rich nation, and if we ever get serious about developing our domestic resources, including oil and natural gas, we can avoid these periodic price spikes. First, we must put U.S. producers back to work in the Gulf of Mexico, a process that has been hampered by the "slow-walking" of drilling permits...In addition, a proposed pipeline to carry Canadian crude from Alberta's oil sands to refineries on the Gulf Coast should be approved without further delay. The Hill's E2 Wire: Oil Industry: EPA's Reg Review Plan Does Not Go Far Enough: A plan released last week by the Environmental Protection Agency (EPA) to review dozens of its regulations to ensure they are not overly as burdensome does not go far enough, the oil industry said Wednesday. "The administration needs to go much further if it is serious about getting the American economy on track," American Petroleum Institute Director of Scientific and Regulatory Affairs Howard Feldman said Wednesday on a conference call with reporters..."EPA is in the process of implementing enormously costly regulations on the very businesses that can and will create American jobs while continuing to improve environmental performance," Feldman said. "We are particularly concerned with the agency's plans to tighten the ozone standard and implement greenhouse gas controls on industry."... API says the climate regulations -- which began phasing in for new and upgraded facilities earlier this year -- will result in huge costs to industry, which will be passed on to consumers. In addition, facilities won't be able to meet more stringent ozone standards, which are based on a January 2010 EPA proposal to lower the National Ambient Air Quality Standard for ozone.

Pierce County Herald: Strive to Cut Gas Costs: The primary reason for the increasing price at the pump is the expense in making fuel, according to information from the American Petroleum Institute. While both supply and demand for gas have risen in the U.S., the worldwide demand for crude oil is up and the supply of crude oil is down. Middle East turmoil and loss of supply have further tightened markets. Higher crude oil costs and mandates for ethanol have resulted in gas being more expensive to make. To offset the price hikes, the institute's chief economist suggests motorists take the following five steps: drive slower, avoid abrupt stops and starts, don't overuse the air conditioner, plan trips in advance and maintain the vehicle.

Wall Street Journal: Future Oil Supplies Can Lower Prices Today: If we open up more North American resources for development, we may very well shift long-term expectations on domestic supply and receive the benefits of lower prices even before the supplies come to market. We may even get some pleasant surprises, such as what we recently experienced with the shale gas revolution. New discoveries of shale gas, and breakthroughs in the technology of extraction, have pushed down natural gas prices between $4-$6 per thousand cubic feet (mcf) over the last three years. These lower prices have saved American consumers over $50 billion a year, according to data from the federal Energy Information Agency. I will leave you with a statistic: If we can alter the long-term price of crude oil by $20 a barrel--let's say to $80 instead of $100--the savings in our import bill alone would be $100 billion per year. This would immediately foster economic growth. That means more jobs, a better return on capital, higher corporate and personal income taxes paid, and government revenues from bonus bids and royalties from petroleum development.

Additional Resources:

The New York Times: Invitation to a Discussion: The Energy Future

Investor's Business Daily: Another Wave of American Oil

SayAnythingBlog.com: Oil Company Tax Hikes Lead to Less Supply - Not More

Financial Post: Shale Gas Emerging as One of the World's Biggest Job Creators

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.