Today, the Center for American Progress released a new report erroneously stating that pro-energy policies don’t create jobs. Senior Vice president for Policy at The Institute for Energy Research, Dan Kish, notes how CAP’s latest report is, “…more of the same” from the Center for (Reversing) American Progress:
“In light of the failure of Solyndra, which cost taxpayers nearly half a billion dollars, CAP is attempting to change the narrative and again launch an attack on one of the few sectors actually creating jobs in the Obama economy. This report, which relies on questionable facts and a laughable premise is the latest salvo in the Obama Administration’s ongoing war on domestic energy and is a blatant attempt to impose a national energy tax on the American people.”
CAP Myth: The President’s deficit reduction plan rightly eliminates $41 billion in tax loopholes for the oil and gas industry over the next decade.
IER Fact-Check #1: The Obama Administration is forgoing two and a half times as much….$100 billion per decade…in bonus bids because they have stopped leasing energy offshore. Just today, Senator David Vitter of Louisiana and 3 other Senators sent a letter to Secretary Salazar pointing out that on his watch, offshore oil lease sales have fallen from $10 billion for the Treasury in 2008 to $0 this year. If the Obama administration wants US jobs and investment, they would allow people to invest here. Their venal obeisance to the wishes of the most extreme anti-energy groups is costing the US jobs and revenue.
IER Fact-Check #2: These “special interest loopholes” are actually longstanding tax provisions used by most other U.S. companies, including a dual capacity foreign tax credit preventing oil and natural gas firms – along with virtually every U.S. firm earning income abroad – from being taxed twice. Although a central tenet of our tax system is that companies are taxed on net income after costs, the President’s plan would prohibit oil and gas companies from deducting intangible drilling costs, but allow banks to deduct the cost of potentially bad loans before they default and Hollywood studios to keep accelerated deductions for film production costs. If the Administration were serious about tax reform, why target just one industry?
CAP Myth: The big five oil companies have ample financial resources that dwarf the value of these tax breaks. These companies enjoy billions in cash reserves, made nearly $1 trillion in profits over the past decade, and at least one company (ExxonMobil) pays a lower effective tax rate than the average American family.
IER Fact Check #3: In a rushed effort to slander the industry, CAP rightly pulled the $1 trillion figure but erroneously attributed it to profits. The industry actuallyadds $1 trillion to the economy each year, including $470 billion in spending, wages, and dividends alone.
IER Fact Check #4: Another inconvenient truth is that America’s energy producers are taxed at a much higher rate than they profit. In 2010, industry paid 41 cents in taxes out of every dollar earned, compared to other companies in the S&P 500 that paid 26.5 cents. Chevron and ExxonMobil paid effective tax rates of about 44 percent and 42 percent, respectively, between 2005 and 2009. Though CAP claims that ExxonMobil’s effective tax rate in 2010 was 18 percent, lower than average household rate of 21 percent, CNN reports that Exxon actually paid 47% that year. Busted. Industry earnings, on the other hand, average 8 cents for every dollar of sales in the first quarter of 2011.
CAP Myth: The big five oil companies aren’t investing in job creation or clean energy.
IER Fact Check #5: The U.S. oil and gas industry, which supports more than 9 million jobs, spent $266 billion in 2010 on new and existing energy projects, and to enhance refinery and other downstream operations. Without energy taxes, however, the industry could do even more. An API analysis found that by 2020, the oil and natural gas industry could create about 1.1 million new jobs, add $127 billion to government revenues, and increase energy production by about almost 1.5 billion barrels/year.