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The Oil and Gas Industry Fuels the Economy, Not Just Our Cars

August 16, 2012 RSS Feed Print

Pete Sepp is executive vice president of the National Taxpayers Union.

Just days after presumptive GOP nominee Mitt Romney announced that Rep. Paul Ryan was his choice for running mate on the Republican presidential ticket, the candidates from both major parties hit the campaign trail in greater earnest. One of the first issues they stressed was America's energy policy.

To hear President Obama tell it, as he did in a swing through Iowa this week, more government favors for alternative sources (and punitive tax policies toward fossil fuel sources) are necessary to fulfill his platform. Unfortunately, Obama's rhetoric—really just a continuation of counterproductive schemes I've already written about at length—does little to move our nation toward better solutions. The reality, though, is that the American energy industry, including oil, gas, and coal, is and must continue to be an indispensable foundation for our economy. The growth prospects of manufacturing, construction, transportation, and services (from healthcare to pizza delivery) are all affected by the availability of affordable energy.

[See a collection of political cartoons on energy policy.]

In fact, American oil and gas companies alone have made a much bigger contribution toward a potential recovery than many citizens realize (see the infographic below). The U.S. economy benefits greatly from substantial investments (over $36 billion), hiring (148,000 direct and indirect jobs), and taxes paid (over $95 billion) by oil and gas firms in 2011. Yet, old habits die hard, and these same companies are continuously targeted by politicians who seek to impose even higher taxes at all levels, more constrictive regulatory regimes, and more barriers to domestic oil and gas production offshore and onshore.

U.S. policymakers, regulators, and taxing authorities ought to recognize the big-picture consequences of their actions, even if they have to be broken into snapshots like those depicted above. Yes, pundits argue about how best to measure worldwide tax burdens of multinational companies, but sources ranging from the U.S. Energy Information Administration to the Business Roundtable put the tax loads for major oil and gas firms well above those of other industries.

In short, this infographic starkly illustrates the choices for officials in Washington and other jurisdictions throughout the country. They can apply sensible regulations, even-handed tax reforms, and a free-market perspective to energy development that doesn't play favorites, or they can resort to political demagoguery that puts big government even more firmly in the driver's seat. Should they decide on the latter approach, then the investments, jobs, and even government revenues that flow from a full-fledged recovery might not materialize. In that case, the figures you are about to see could become a wistful reminder of the past, rather than a hopeful sign of the future.