Think Tank: Obama speech annoys everyone

07 February 2014 10:15 Source:ICIS Chemical Business

President Barack Obama did not win many hearts and minds among energy or environmental officials with his State of the Union speech, instead triggering heartburn in both sectors and among general business interests.

US energy sector officials charged that Obama’s renewed call for higher taxes on oil and natural gas producers is unwarranted and warned that tax hikes would undermine Obama’s own economic goals. Obama again called for tax reform that, among other things, “stops giving $4bn a year to fossil fuel industries that don’t need it, so we can invest more in fuels of the future that do”.

 Obama’s address has been attacked by several industry groups

Copyright: Rex Features

He was referring to alternative energy developments, such as biofuels, solar and wind power – industries that are heavily subsidised by federal funds. Citing Obama’s call for reducing income inequality in the US, American Petroleum Institute (API) president Jack Gerard argued that the White House could help spur income growth by allowing more oil and natural gas development.

“Punishing energy companies by raising taxes is no sound energy policy and could lead to less energy, less government revenue and fewer jobs,” he said.

Thomas Pyle, president of the energy industry think-tank Institute for Energy Research (IER), argued that the nation’s oil and gas producers do not receive special tax breaks and that the sector pays an already high tax bill.

“The president once again raised the long-discredited claim that oil and gas industries are receiving ‘billions of dollars’ in tax breaks, as though the standard business deductions afforded to countless other job creators in our economy … are somehow undeserved or fraudulently claimed by the US companies who pay more taxes than any other industry,” Pyle said. He also took the president to task for his declaration of increasing US energy independence.

“In one breath, [Obama] seemingly took credit for increased supplies of domestic oil and natural gas that owe their development to leasing activities on state and private lands. In the next, he suggested that his administration’s failed policies to underwrite expensive and unreliable ‘green’ energy sources are somehow helping the economy.”

On the contrary, Pyle argues that the Obama administration’s energy policies have hindered rather than helped domestic oil and gas production. From “closing access to federal lands where affordable energy reserves lie untouched, to funnelling billions of taxpayer dollars to fund reckless renewable energy ventures.”

By Joe Kamalick