API: ‘Gang of 10’ Proposal, Light on Production, Heavy on Taxes

By August 15, 2008Energy

The American Petroleum Institute has released a letter to the U.S. Senate that expresses opposition to the “Gang of Ten” proposal, calling it a case of “light on new production/heavy on new taxes.”

The proposal’s approach to access to federal oil and natural gas resources is far too limited in its scope. And, it is unfortunately paired with the imposition of at least $30 billion in new taxes on the oil and natural gas industry that would have the effect of limiting needed oil and gas investment. A lesson learned well in the 1970-80 period. These measures create an environment that will virtually assure a future with less, not more, domestic production.

While this new proposal would expand access in the waters of the Outer Continental Shelf, it unfortunately limits any expansion over current law to the eastern Gulf of Mexico and waters off four Atlantic Coast states in the South. Even in these areas, development in federal waters less than 50 miles offshore would be banned – despite the fact that offshore facilities would need to be 12 or fewer miles from shore to be visible from land. Leasing in the North Atlantic and off the Pacific Coast would be banned and plentiful hydrocarbon resources in Alaska would remain off limits. Significant regulatory burdens on new development would remain in place. The imposition of $30 billion in clearly discriminatory new taxes, to pay for federal investment in alternatives and renewables, ignores the fact that the industry already provides more than 70 percent of all North American investment in research and development in emerging energy technologies.

Senate Majority Leader Harry Reid discusses the Gang of 10 proposal in an interview in the Reno Gazette Journal. It’s a little confusing. Except for this statement, which is a clear assertion:  “There isn’t a person in the world, I’m not talking about politicians, I’m talking about oil people, will tell you that drilling will lower the price of oil.”

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