US energy sector leader warns against Obama policies

04 January 2011 19:21  [Source: ICIS news]

WASHINGTON (ICIS)--A leading US energy industry official on Tuesday warned that President Barack Obama's administration policies would make the nation more dependent on foreign sources, reduce energy industry tax revenues and kill jobs.

Jack Gerard, president of the American Petroleum Institute (API), said that decisions to be made by the White House and Congress this year “could have a profound impact on our country’s energy future and with it, our economic prosperity”.

Speaking at a press conference to roll out the institute’s new advertising campaign and issue a new analysis of US energy production and resources, Gerard was critical of recent decisions by the Department of the Interior (DOI) to close most US offshore areas to oil and gas exploration and development.

“Closing the eastern Gulf and the Atlantic and Pacific coasts to offshore drilling and exploration - and delaying development in Alaska - sends job creation elsewhere, and it closes the door on economic growth,” Gerard said.

“At a time when we are attempting to reduce the deficit and put more Americans back to work, closing off Outer Continental Shelf [OCS] development opportunities is the wrong choice,” he said, adding: “And it is one we will be feeling the effect of for years.”

Gerard conceded that the April 2010 Deepwater Horizon rig fire and resulting months-long oil leak in US waters of the Gulf of Mexico demonstrated that the industry needed to improve its safety procedures.

However, he said, while the industry has moved to improve safety, federal officials have failed to provide clear guidelines on what would be required to gain drilling permits and on rules for safe and reliable operations.

“When questions linger about whether new projects can move forward, where US regulatory certainty is lacking, those projects move elsewhere,” Gerard said.

“We’ve already seen some companies send their idled Gulf rigs to waters off the coast of Africa and South America - and other companies are discussing plans to relocate their Gulf rigs to places where exploration and production continue,” he said.

“As these rigs leave us, so do the jobs and revenue they create.”

He also criticised proposals by the White House and some in Congress to raise taxes on domestic oil and gas production in order to help fund government programmes and reduce the nation’s debt load.

Gerard argued that increasing taxes on energy production reduces tax revenues in the long run.

“An additional $5bn [€3.75bn] in new annual taxes - similar to what’s been proposed by the administration or some in Congress - could actually decrease cumulative government revenue by $128bn by 2025,” he said, because tax increases could marginalise some production and drive more development abroad.

Instead, Gerard said, “If we open areas that are currently off-limits to development, we could create more than 500,000 jobs throughout the economy and generate an additional $150bn in government revenue by 2025”.

“Our policymakers are at a crossroads,” he said.

Gerard said that the recent US national elections in November last year showed that the nation’s voters want government policies that promote growth and job creation.

“But there is growing, bipartisan concern that regulatory overreach from burgeoning federal agencies will decrease America’s competitiveness and increase the kind of uncertainty that can stall new energy projects, or in some cases kill them altogether,” he said.

($1 = €0.75)

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By: Joe Kamalick
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