Chris John, President of Louisiana Mid-Continent Oil and Gas Association wrote an editorial published in the Times Picayune of 2/19/10. He does not like President Obama's budget for fiscal 2010/2011, that he says proposes higher taxes and eliminates incentives on the Oil and Gas industry. He does not explain that and the rest of his editorial is really curious to say the least. His higher tax must be in conjunction with Obama's plans to let the remaining Bush tax cuts expire, but John does not say.
Mr. John said the gulf continues to prove that more resources are available if government will allow our industry to economically pursue the energy at our doorstep. Mr. John's words economically pursue seem to be code words for the continuation of billions of dollars of corporate welfare that the industry has enjoyed for over 40 years and has done nothing to make the country less dependent on foreign oil.
The fact is the oil and gas industry generate enough profit to do as much drilling and production as they want to. The price the consumers are paying for a barrel of oil and a gallon of gasoline has reached its highest level in the past several years, and as of this writing a barrel of oil is still over $70/barrel. At the same time the industry's finding and production cost are going down. Marathon Oil announced just the other week their production cost was reduced 15% in 2009.
Now a word concerning taxes that business pays. Until the law was changed a few years ago many businesses paid no taxes. Those who do, pass those taxes on to the consumer in their price structure. Those businesses that receive corporate welfare or so called incentives has never resulted in lower prices to the consumer. This writer worked in the oil field trucking industry for over 24 years. The state of Louisiana at that time charged the trucking industry a 2% transportation tax. That 2% was built into the truckers rates for hauling and passed on to the consumer paying the freight bill. I feel Mr. John is aware of that fact since his family has been the owner of an oil field trucking company.
Mr. Obama's budget shows that the federal government is expecting individual income tax revenue of $1.12 Trillion which represents 43% of federal revenue. Corporate income tax is expected to be $270 Billion. Yea that's right, billion. The price of a barrel of oil and gallon of gasoline is enough incentive for the industry to stay busy. The problem is greed. The industry wants all the tax breaks and incentives at the expense of the people and then charge outrageous prices even when consumers are cutting back their use of gasoline. The CEO's make out like bandits with bonuses and other goodies. That is really what tax breaks and incentives are all about.
Keep in mind, the Bush administration passed legislation that gave the oil and gas industry billions of dollars in tax breaks and incentives and oil shot up to $150 barrel and gasoline over $3.50 gallon. Record profits were recorded. The oil and gas industry is only entitled to being treated fairly like all businesses. No special favors or tax breaks. They should also take the responsibility for any damage their activity does to the environment and hold themselves responsible.
