The following column by Bernard Weinstein of SMU appeared in the September 13, 2010, edition of The Omaha World-Herald. Weinstein is associate director of SMU's Maguire Energy Institute and an adjunct professor of business economics.
By Bernard Weinstein
Nearly everyone but the most extreme environmental activists now agrees that the Gulf Coast drilling moratorium has been a mistake. Even the U.S. Department of the Interior estimates that the ban has resulted in the loss of more than 23,000 U.S. jobs.
Luckily, Nebraska has been only marginally affected by this shortsighted policy and currently enjoys an unemployment rate of 4.7 percent while growing faster than most other states. But this positive trend could be reversed if the Obama administration continues to pursue three harmful policy initiatives.
Although unlikely to pass this year, cap-and-trade still remains a threat to Nebraskans. Thankfully, U.S. Sen. Ben Nelson has been a leading advocate against cap-and-trade because of its potential to significantly increase utility rates and thereby reduce the prospects for a sustained economic recovery. He has voiced his opposition to this “de facto” energy tax hike, stating it would mean higher electricity bills for consumers, businesses and local farmers.
While cap-and-trade remains off the table for now, we should nonetheless be striving to decrease our dependence on foreign energy and to reduce carbon emissions. Natural gas, which is abundant in Nebraska and employs thousands of workers, can help achieve these goals.
Nebraska is the 25th-largest producer of natural gas in the country. While the state has embraced this clean fuel source, the East Coast is showing resistance.
For example, New York has banned natural gas drilling for at least a year in reaction to unfounded concerns about safety and groundwater contamination. Should the federal Environmental Protection Agency begin regulating various aspects of natural gas production, as has been proposed by some environmental groups, future production in Nebraska could be at risk, with attendant losses of jobs, income and tax revenue.
In addition, the Obama administration and its congressional allies want to raise taxes on U.S. oil and gas companies, which would impede the flow of these valuable, domestically produced resources and slow our economic recovery.
Among other things, they have proposed eliminating the dual capacity tax exemption, which makes it possible for American firms to operate overseas, free from the burden of double taxation. Obviously, the loss of this deduction would be a huge setback for U.S. energy companies. If we made them pay twice the amount of tax as their foreign rivals, U.S. companies would find themselves at a competitive disadvantage.
Another misguided congressional tax plan would deprive oil and natural gas producers of the manufacturing tax deduction. This section of the tax code was designed to encourage U.S. companies to invest in domestic production facilities, as opposed to foreign operations.
As in the case of changing the dual capacity statutes, singling out energy companies for the loss of this pro-competitive deduction would directly benefit foreign oil corporations, shift production abroad and increase our dependence on imported fuels and petrochemicals.
Energy is the lifeblood of the American economy, and residents of states close to the energy business, such as Nebraska, understand the wisdom of letting this industry do its job.
Nebraska also enjoys some of the lowest industrial rates for electricity and natural gas in the country, making it an attractive location for manufacturers. To create more jobs for Nebraskans, it is imperative that energy prices remain stable.
Louisiana Sen. Mary Landrieu, Louisiana Gov. Bobby Jindal and William Reilly, a leader of President Barack Obama’s oil spill commission, all have called for an end to the offshore drilling moratorium. They should join the rest of us who care about this important industry and the future of America’s energy supply by opposing ill-advised policies that would serve only to increase costs on businesses and consumers, diminish domestic energy production and increase our dependence on imports.
The U.S. energy industry supports 9 million American jobs and directly benefits everyone who depends on affordable fuel. In Nebraska, this means families, farms, local businesses and major state employers like Tyson Foods, ConAgra and Union Pacific.
Rather than a moratorium on Gulf Coast drilling, the nation would be better served by a moratorium on destructive regulations and taxes that threaten America’s economy and energy security.
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