Earlier this year the Biden Administration released its annual budget proposal that included targeted tax increases on America’s natural gas and oil industry, totaling more than $140 billion1.
While ConocoPhillips broadly shares President Biden’s vision for modernizing critical infrastructure, addressing climate change and accelerating the country’s economic recovery, the proposed tax increases disproportionately target the sector best positioned to solve these challenges: America’s natural gas and oil industry. Increased taxes on American energy will undermine economic recovery and job creation, push natural gas and oil investments overseas and lead to less government revenue, not more.
The United States is the world’s leading producer of natural gas and oil. Natural gas and oil companies supported 11.3 million jobs in 2019 that provided $893 billion in wages to American families. Strengthening the energy industry means more jobs for Americans, less reliance on foreign oil, and a safer and more secure country. Instead of keeping the policies in place that led to these benefits, Washington wants to target the industry with tax hikes that could stop the nation’s energy revolution in its tracks.
We need energy policies that put America first, not policies that put America at a disadvantage.
With the debate currently rising on taxation of the natural gas and oil industry, it is important to note that the industry already pays its fair share in taxes – and then some. The federal government collects $148 million from natural gas and oil every day. Yearly revenues of around $54 billion represent roughly 8% of the federal government’s non-defense discretionary budget. Our industry generates $109.3 billion in federal, state, and local tax revenue each year, and in 2019 our industry contributed $1.7 trillion to the U.S. GDP.
Beyond the revenue issue, natural gas plays a critical role in reducing carbon dioxide emissions in the U.S. In fact, the work of our industry is the chief reason the U.S. has reduced carbon dioxide emissions more than any other country since 2000. Hiking taxes on the American energy industry could impact that progress by moving production to countries with lower environmental standards.
Rather than imposing punitive tax rates that would be counterproductive, a better method to raise government revenue would be to implement more pro-American energy policies. This would foster increased industry activity and thus generate greater tax receipts, rents and royalties. The right course for ensuring our economic growth is to sustain and extend the energy renaissance with smart policies that encourage safe energy development, while also increasing revenues to federal, state, and local governments.
We believe that smart tax policy should put critical American industries first, protect good-paying jobs, assure our environmental leadership and bolster America’s energy security.
In the coming weeks, be on the lookout for more information about the ongoing debate about taxes. Working together, we can ensure America’s energy industry continues to lead the way in building a sustainable energy future.
1Based on calculations by the American Petroleum Institute.