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President Obama just unveiled his FY2015 budget proposal.
His plan includes hefty new taxes on job creators. Much of this burden will fall on the energy industry, which has proven to be a particularly powerful engine of new employment in recent years.
Indeed, the oil and natural gas sector now supports 9.8 million jobs. Yet the Obama budget slaps it with $100 billion in new taxes over the next decade — that’s about 10 percent of all of the new tax revenue his package would generate.
In pushing for higher rates on proven job creators, President Obama is undermining his own State of the Union promise to provide government-based solutions to economic inequality.
The average oil and natural gas sector wage is about $12,000 above the national average. And these industry opportunities aren’t exclusively the domain of highly educated specialists, like geologists and petrochemical engineers. In fact, most energy jobs are skilled blue collar, such as drill operators and construction specialists.
Job opportunities abound for women and minorities. A new study from IHS finds that the oil, natural gas and petrochemicals industries will generate up to 1.3 million new job opportunities by 2030 — with almost 408,000 positions projected to be held by African American and Hispanic workers, while women will fill an estimated 185,000 industry jobs.
The domestic energy industry has already turned around the economic fortunes of some parts of America. North Dakota, for example, has recently become one of the largest energy producers in the United States. In the fourth quarter of last year, the state generated an astonishing one million barrels of oil a day.
As a result of its ongoing energy boom, North Dakota’s per-capita income has jumped an astounding 114 percent since 2000, raising the state from 39th to 5th in average personal income. And its unemployment rate is now at a national low of 2.6 percent.
North Dakota shows how unleashing private energy entrepreneurs to develop our natural resources generates robust employment and widespread economic opportunity. Strapping those same firms with huge new taxes will drain them of the capital needed to finance such expeditions. And it will mute the profit potential of new ventures, reducing the incentive to take the risk in the first place.
Fortunately, there’s still time for the administration to move away from policies that undermine job creation potential in the oil and natural gas sector. And there are obvious, pro-active steps officials could be taking to hasten energy sector growth and cultivate job growth.
For starters, the government needs to open the door for private investments to modernize the national energy infrastructure. The existing pipeline, storage, processing, and rail systems were designed at a time when the bulk of our domestic energy transportation involved moving imported crude and petroleum from the Gulf Coast toward the northern United States.
Thanks to the production surge in the Northeast and Canada, the national flow of energy shipments has effectively reversed since then. Crude oil shipments from the Gulf to the Midwest decreased 500,000 barrels per day over the last five years. Meanwhile, shipments running the opposite direction jumped from 50,000 to 380,000 barrels a day.
Clearly, our national energy infrastructure needs a redesign. And investment in infrastructure upgrades would generate massive economic gains. A newly released analysis from the IHS consulting group found that essential infrastructure improvements could, over the next decade, elicit up to $1.14 trillion in new private capital investment and support 1.15 million new jobs per year.
Public policymakers should also revisit decades-old restrictions on energy exports. A new International Energy Agency report warns that the growing volume of crude oil prevented from reaching international markets threatens to put the brakes on production growth. Exporting a portion of our abundant supplies to overseas allies would stimulate additional industry expansion here at home.
Of course, this administration’s big concern when considering pro-energy policies is climate change. But the president needs to recognize that the oil and gas industry is an ally, not an enemy, in this fight.
The voluntary evolution of the energy sector toward natural gas has dramatically reduced greenhouse emissions. And the traditional energy sector has been investing heavily in low- and zero-carbon technologies. Indeed, one out of every six dollars going to green tech today comes from the oil and gas business.
As the president begins his campaign to promote his new budget, the oil and natural gas industry stands ready to work with anyone interested in harnessing our nation’s vast energy resources to create jobs and grow the economy.
Jack Gerard is president and CEO of American Petroleum Institute.
Published: April 10, 2014 – Volume 12 – Issue 52