Louisiana and other oil and gas producing states stand to lose tens of thousands of jobs if President Barack Obama’s budget, which calls for the repeal of energy tax credits, is passed.
That’s the message that came out Tuesday at a meeting in Lafayette between U.S. Rep. Charles Boustany, R-Lafayette, and representatives of six independent oil and gas companies.
The budget proposals approved by the House of Representatives and the Senate repeal six energy tax credits, some in place since the early 1900s, to help the oil and gas industry.
Differences in the proposals must be worked out before the budget gets final approval.
Congress returns to work in a week to consider bills that would implement the tax credit repeals. If repealed, the effect would be a $31 billion tax increase over 10 years on independent producers, Boustany said.
Obama’s budget shifts federal aid away from fossil fuel producers to renewable energy efforts. What’s lacking is a transition strategy, Boustany said. The alternative fuel technology does not exist today to meet the nation’s demand for energy, he said.
While Americans may have little sympathy for mammoth oil and gas companies that rake in huge profits, most of the nation’s domestic oil and gas production is from small independent companies operating in the Gulf of Mexico, not the big international companies, Boustany said.
“These proposals would crush the domestic industry,” said Lawrence Svendson, operations manager with Marlin Energy in Lafayette. “We depend on those incentives to help make projects economical,” he added.
Without the credits, independent producers will spend nearly twice as much on capital, making some projects uneconomical. Companies will stop drilling, costing oil-producing states jobs and state governments revenue, Svendson said. The trickle-down is that oil and gas prices will spike with less production, he said.
Louisiana was devastated in the 1980s in part from windfall profit taxes, Boustany said.
“The effect of these tax increases would be worse, much worse,” he said.
By the numbers
$31 billion, tax increase on independent producers over 10 years if tax credits are repealed.
68 percent of U.S. domestic oil production is from independents.
82 percent of U.S. domestic natural gas production is from independents.