DON'T BLAME OIL COMPANIES
April 2, 2008
These days, frustrated consumers often blame high prices at the pump on the nation's oil companies. And the common elixir proposed by some policymakers is to impose additional taxes to benefit alternative energy on the very companies being called upon to invest in needed new supplies of oil and natural gas. The oil and gas industry does not oppose incentives for alternatives, but any plan that pays for them with higher taxes on oil and natural gas would likely result in less energy for our country, says Red Cavaney, president and CEO of the American Petroleum Institute.
- The main target is a $13.6 billion tax hike approved by the House that would eliminate manufacturing deductions for the five largest U.S.-based oil companies and freeze the deduction at current levels for the rest of the oil industry.
- Enacted in 2004, this deduction, available to all U.S. manufacturers, was designed to spur investment and create more U.S. jobs.
- Another provision would raise taxes by $3 billion and put U.S. oil and gas companies at a further disadvantage, as they compete in challenging global markets.
The pain at the pump is real, reflecting the global price of crude oil, says Cavaney. Nearly 70 percent of the cost of gasoline is for crude, according to the government's Energy Information Administration. What our nation needs is more energy of all kinds, including alternatives. These taxes would move us in the wrong direction by taking away income that could be reinvested in more oil and gas.
Lawmakers are proposing to unfairly single out a vital industry and punish its biggest companies that uniquely possess the ability to provide American families and businesses the energy they need. Tax increases in the face of a slumping economy are clearly counterproductive, explains Cavaney.
Source: Red Cavaney, "Opposing view: Don't blame oil companies; Tax hikes would take away income that could be reinvested in oil, gas," USA Today, April 2, 2008.
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