The Administration spent much of today on its heels, attempting to downplay another disappointing jobs report. It’s a reality check and, to put it mildly, this reality is bad news for America. The job market is so depressed that 368,000 people have stopped looking for work. And what’s even more incredible, the government doesn’t even count them among the unemployed.

Yet there was at least one bright spot. The “go-to” public enemy for the Administration, the oil and gas industry, was one of the only sectors that prevented the White House from having to explain a total disaster of an jobs report. Consistently (and unfairly) dragged through the mud by those would like to cripple the industry, oil and gas provided 1,100 new jobs last month.

Imagine what they could do if Washington could put together a pro-growth agenda that focus on creating a positive environment for all businesses rather than attempting to demonize certain job creators to promote their own agenda.

Today the Senate rejected S. 2204, a bill to raise taxes on energy companies by more than $35 billion.  The NAM has weighed in strongly against the legislation and it was voted down by a vote of 51-47. Manufacturers know that these tax hikes would deal a devastating blow to energy companies in the U.S. pursuing resources critical to our nation’s energy security as well as saddle everyone with higher costs.

This proposal – and others like it – will only distance the U.S. from our goal of energy policy that will increase supply and lower costs and should be voted down. It’s another strike against manufacturers, consumers of one-third of our nation’s energy, who already face a 20 percent cost disadvantage with their foreign competitors. If we seek to truly achieve energy independence, lower costs and improved competitiveness around the globe we must avoid a policy of picking winners and losers through punitive taxes.

Dispite the bill’s defeat today, there are still a number of people, including President Obama, that still wish to hang an albatross around the necks of energy companies in the U.S. with new taxes.  The NAM is committed to fighting this unfair effort and manufacturers will continue to support and work towards an “all of the above” energy policy that will deliver for consumers and our economy.

Huzzah for ExxonMobil’s Ken Cohen, vice president of public and government affairs, for using the excellent “Perspectives” blog to lay out the details and context that rightfully belong with the company’s announcement of $10.7 billion in earnings for the first quarter of 2011.

From “ExxonMobil’s earnings: The real story you won’t hear in Washington“:

ExxonMobil’s earnings are from operations in more than 100 countries around the world. During the first quarter, more than three-quarters of our operating earnings came from outside of the United States.

The part of ExxonMobil’s business that refines and sells gasoline, diesel and other products in the United States represents less than 6 percent – or 6 cents on the dollar – of our earnings.

Why so little? Because we actually buy more crude oil to refine into gasoline and diesel in the U.S. than we produce ourselves. And these purchases are made on the open market at the prevailing rates.

During the first three months of this year, for every gallon of gasoline and other products we refined and sold in the United States, we earned about 7 cents. Compare that to the 40 to 60 cents per gallon that went from gasoline consumers to the government (state and federal) in gasoline taxes.

Rising gas prices do indeed have an impact on consumers, families and businesses, Cohen writes before explaining the primary causes of the increase: (continue reading…)

Jay Timmons, president and CEO of the National Association of Manufacturers, issued a statement in response to President Obama’s letter to Congress calling for higher taxes on domestic oil and gas production. Excerpt:

That misguided policy would result in more inflation, higher prices at the pump for already beleaguered Americans, and increased costs for products consumers need and use every day.Manufacturers support efforts to increase the use of clean energy sources and are helping to lead the way in meeting future energy demands with new energy sources. Until those alternative sources are cost-competitive with oil and gas and sufficient to meet this country’s demand for energy, manufacturers believe the United States should expand access to domestic energy by opening additional areas of the country – offshore and onshore – to exploration and development.

Timmons concluded: “President Obama wants to raise taxes on energy companies and, at the same time, reduce the cost of gasoline. He can’t have it both ways.”

John Felmy, chief economist of the American Petroleum Institute, had several pithy comments for the reporters. From USA Today, “Obama, Republicans tangle over oil subsidies“:

This is a proposal born of desperation that would do nothing to reduce gasoline prices,” said American Petroleum Institute chief economist John Felmy. “It would reduce investment in new oil and natural gas projects, cost new jobs and decrease oil and natural gas production.” (continue reading…)

President Obama has made criticisms of the U.S. energy industry a feature in his recent public appearances, especially the campaign fundraisers, and today he elevated the political misdirection with a “Letter from the President to Congressional Leadership Regarding Oil Subsidies.”

While there is no silver bullet to address rising gas prices in the short term, there are steps we can take to ensure the American people don’t fall victim to skyrocketing gas prices over the long term.   One of those steps is to eliminate unwarranted tax breaks to the oil and gas industry and invest that revenue into clean energy to reduce our dependence on foreign oil. Our outdated tax laws currently provide the oil and gas industry more than $4 billion per year in these subsidies, even though oil prices are high and the industry is projected to report outsized profits this quarter.

We must raise taxes on domestic oil and gas production in order to reduce our dependence on foreign oil! Is that really a serious argument?

No. No it’s not. Just as the President’s repeated attacks about “subsidies” and “tax breaks” for Big Oil are not serious arguments.

The American Petroleum Institute explains the realities of energy taxation in the United States in this fact sheet. Good to actually see some actual facts in this important policy debate.

The U.S. oil and natural gas industry does not receive “subsidized” payments from the government to produce oil and gas. However, there are many provisions in the tax code that allow companies to recover their costs. The oil and gas industry are eligible for these deductions, which are similar to, if not the same as, deductions available to many other industries.

Tax deductions should in no way be confused with subsidies. A fundamental pillar of the U.S. income tax system is that businesses are taxed only on net income. This means that there needs to be some practical and fair method for businesses to recover costs. The policies underlying cost recovery provisions in the tax code legitimately utilized by the oil and natural gas industry are no different than those for any other industry, and are necessary to insure that our industry is treated no differently than any other. (continue reading…)

The National Association of Manufacturers ran this ad today in Politico.
Politico Deepwater Drilling Ad Paper Version

And we’re giving Scribd a try as an embedding tool.

The National Association of Manufacturers today began TV and radio advertising in nine states to oppose tax increases on energy production, which some members of Congress want to enact when they reconvene in Washington next week.

In a statement, NAM President and CEO John Engler said: “Our message to Congress is very clear. At a time when unemployment remains over 9 percent, costly energy taxes will make our nation’s economic situation worse by raising costs for businesses and consumers and hurting businesses’ ability to compete in a global marketplace. We are encouraging manufacturers, small businesses and the public to tell Congress to say yes to jobs and no to higher energy taxes.”

The National Federation of Independent Business is joining the NAM in sponsoring the ads. Thank you, NFIB!

Television and radio spots will run in Arkansas, Colorado, Indiana, Maine, Missouri, Nevada, Ohio, Virginia and West Virginia. The spots urge Senators in the states to, “Say yes to jobs, and no to higher energy taxes.”

The Wall Street Journal’s John D. MacKinnon has blogged on the new campaign, “Business Groups Target Higher Energy Taxes.”

From The Washington Examiner, “Some Hill Dems cringe at Obama’s $50 billion spending plan”:

Sen. Mary Landrieu, D-La., who is at odds with the Obama administration over its decision to suspend drilling for oil in the Gulf, refused to endorse the plan on Monday, though she is undecided.

“Sen. Landrieu has been and continues to be skeptical of paying for otherwise-beneficial proposals with tax hikes on the oil and gas industry,” said her spokesman, Aaron Saunders. “While these tax increases may be politically popular in some areas of the country, they have a disproportionately negative effect on working families in the Gulf Coast where much of the industry is located. Sen. Landrieu fully supports getting America’s economy back on track, but feels that it should not be done at the expense of the Gulf Coast.”

From Chevron, “Chevron Announces First Oil from Tahiti Field in Gulf of Mexico“:

SAN RAMON, Calif., May 6, 2009 – Chevron Corporation (NYSE: CVX) has announced that it has started crude oil production from its Tahiti Field, the deepest producing field in the Gulf of Mexico. First oil from Tahiti was achieved on May 5, 2009. Daily production is expected to ramp up to approximately 125,000 barrels of crude oil and 70 million cubic feet of natural gas before the end of the year.

The Tahiti Field is one of the largest in the Gulf of Mexico. It was discovered in 2002 and is estimated to contain total recoverable resources of 400 to 500 million oil-equivalent barrels. The total cost for the first phase of the project is $2.7 billion and represents one of 40 projects in which Chevron’s share of the investment is over $1 billion.

Seven years and billions of dollars after discovery of the field, oil!

Good think Chevron makes money. Although not as much as last year. From the San Francisco Chronicle reports that Chevron reported its worst quarterly performance in five years on Friday, as lower oil prices and a fierce global recession cut company’s profits by 64 percent. The $1.84 billion (92 cents per share) in first quarter profits contrasted to the $5.17 billion a year previously ($2.48 a share).

The lower earnings are an industrywide phenomenon caused by dramatically lower prices for natural gas and oil and lower refinery margins. See API news release.

Investments continue, however. Again, from the Chronicle:

[In] spite of relatively low oil prices, the company spent more money finding and developing new fields during the first quarter of this year than it did a year earlier. Exploration and capital expenses totaled $6.5 billion in the first three months of this year, compared to $5.1 billion during the same period last year.

“Long term, investing all the way through the cycle should help,” said Allen Good, an analyst with the Morningstar market research firm. “They don’t go crazy at $150 oil, and they don’t turn off the taps at $50.”