President Obama and his closest congressional ally Senator Dick Durbin (D-IL) are proposing more than $400 billion in new taxes and fees on the oil and natural gas industry.
Why not? Going after "Big Oil" does not require much political capital.
Sadly, the reality is new energy taxes would stifle an economic recovery by increasing energy prices for Americans. More than 80% of Illinois homes are heated by natural gas and there are more that 251 million passenger cars that run on gasoline.
These new taxes will make it more expensive for energy companies to expand or initiate new exploration and development programs, putting our nation further behind in the race for more energy
Are renewables the answer?
While renewable energy sources like wind, solar, geothermal and biofuels are part of the solution, they are not the panacea they are touted to be.
According the Department of Energy, renewable energy currently makes up 7 percent of the nation's energy needs and that number is projected to reach only 13 percent by 2030. The DOE also forecasts oil will continue to account for the largest share of our energy needs filling 34 percent of total energy demand and 87 percent of our transportation needs in 2030.
Higher energy taxes will also rob the industry of the additional capital needed to further invest in renewable fuels. The oil and natural gas industry is the leading sector in investing in renewable sources of energy. Between 2000 and 2007, oil and natural gas companies invested $121 billion on renewable research and development. This investment represents 65% of the estimated combined total of $188 billion spent by all U.S. based companies and the Federal government.
What about "Big Oil's" huge profits?
The erroneous logic behind these taxes is oil and natural gas companies have enormous profits and can afford to take a bigger haircut. In reality, the oil and natural gas sector earned 5.7 cents for every dollar of sales in 2008. In comparison all U.S. manufacturing earned 4.5 cents for every dollar of sales.
Who owns these Big Oil companies?
You do. Almost 43 percent of oil and natural gas company shares are owned by mutual funds and asset management companies that have mutual funds. Those funds are a major retirement savings and investment vehicle for millions of middle-class Americans. Imposing new taxes on the oil and natural gas companies further undermines the retirement security of working people.
We must develop a comprehensive fact-based approach that increases energy efficiency, advances technology, protects our environment, and diversifies our energy sources. Our legislators need to be honest about the facts.
Americans for Prosperity encourages readers to contact Senators Dick Durbin and Roland Burris urging them to oppose new taxes on the oil and gas industry.