By Bernie Becker - 02/08/11 08:36 PM EST
After recently being branded “yesterday’s energy” by President Obama, the oil-and-gas industry is pushing back at Democratic efforts to roll back tax credits and deductions used by energy companies.
Top officials at the American Petroleum Institute (API) on Tuesday said the oil-and-gas industry does not receive favorable tax treatment and called on the administration and Congress to work with the sector to create jobs.
“We really believe we are the low-hanging fruit,” said Marty Durbin, the institute’s executive vice president for government affairs. “If the opportunity is provided for us to safely and reliably produce our domestic resources here at home, you’d see enormous benefits to the government in terms of revenue, enormous benefits in terms of jobs.”
He added that it was unfair to tag oil-and-gas companies as an industry of the past, declaring that companies in the field had poured billions of dollars into low- and no-carbon technologies.
“This is a very forward-looking industry,” Durbin said. “I don’t want to assign motives, but clearly there are those out there who see the political gain in vilifying our industry.”
API’s comments came on the same day that Senate Majority Leader Harry Reid (D-Nev.) and nine other Democratic senators declared that cutting tax breaks and other provisions favorable to oil and gas companies would save at least $20 billion over a decade and help reduce the federal deficit. The Democrats noted that Exxon and Chevron had recently reported sizable profit increases for the fourth quarter of 2010.
“This is just one example of a wasteful item in the budget that could be cut in order to make a down payment toward reducing the nation’s deficit,” the senators wrote in a letter to House Speaker John Boehner (R-Ohio). “If the House chooses to adopt this suggestion, it would represent a good first step toward cutting spending in a bipartisan way.”
Republican staffers in both the House and the Senate sharply criticized the Senate Democrats’ letter, suggesting it would do nothing to help shortfalls in the budget. A House aide labeled the proposal a tax hike, instead of a spending cut, and said it would hurt efforts to create jobs and lead to higher gas prices.
For his part, the president placed the “yesterday” label on oil and gas in both his State of the Union address and in a recent appearance in Pennsylvania, saying that ending tax incentives for companies in that field would allow for more investment in renewable energy sources.
But at the petroleum institute’s briefing, Durbin and Stephen Comstock, API’s tax policy manager, said energy corporations pay their fair share of taxes — and, in fact, pay more taxes than other industries, such as technology and financial services.
The letter sent by Reid and the other senators — including Dick Durbin (D-Ill.), the majority whip, and Charles Schumer (D-N.Y.), the policy chairman — is far from the first time in recent years that Democrats have advocated going after tax provisions they see as too favorable to the oil-and-gas sector.
The president’s first two budgets included proposals to wipe away billions in tax breaks for energy companies. API officials said Tuesday they worried that the upcoming budget plan would include even more provisions they considered harmful.
Sen. Robert Menendez (D-N.J.), one of the names attached to the Senate Democrats’ letter, also announced last week that he was reintroducing a bill that would, among other things, create a tax on production in the Outer Continental Shelf and end a deduction companies have for expenses related to drilling that have no salvage value.
Still, it remains to be seen how much progress Democrats can make in rolling back deductions for oil companies, as those sorts of proposals have historically not been well-received by lawmakers.
Comstock of the API on Tuesday urged members of Congress to again reject any move to roll back tax incentives that help the industry.