DOI head to ask for more taxpayer funding as domestic oil and gas production remains stagnant
WASHINGTON, March 1, 2011 /PRNewswire-USNewswire/ -- Ahead of Department of the Interior Secretary Ken Salazar's anticipated request for increased agency funding in the FY 2012 budget at committee hearings on Capitol Hill this week, Louisiana State University Endowed Chair of Banking and nationally-renowned economist Dr. Joseph R. Mason emphasizes the economic benefits of lifting the ongoing drilling moratorium in the Gulf of Mexico. A new report from the President's Oil Spill Commission indicates the devastating Deepwater Horizon explosion and resulting oil spill last summer was the result of failed company safety standards and not systemic failures within the broader oil and gas industry.
"Despite the official end of the moratorium in October 2011, the Gulf has yet to see an economic rebound because the oil and gas industry is unable to resume drilling. While President Obama's moratorium has ended, the DOI's moratorium continues. The federal government has unnecessarily curtailed domestic oil and natural gas development, forgoing in excess of $100 billion in taxes annually, while spending another $73 billion in DOI projects for wind, geothermal and solar power initiatives. Pursuing additional funding while ignoring the potential revenue to be gained from existing resources does not make for sound fiscal economics."
"Instead of subsidizing economically unsustainable energy sources in hopes of jobs in the future, expanded offshore drilling alone could create 250,000 jobs and add $500 billion to GDP right now. The U.S. must pursue policies that encourage real economic growth to rein in the growing federal deficit. Proposing higher tax rates on productive sectors of the economy while continuing to borrow will only further restrain growth."
The White House 2012 budget would increase the tax burden on oil and gas companies by $90 billion, yet provides an additional $8 billion in so-called "green" initiatives. If subsidies are not the way to go for oil and gas, why are they any better for other energy development?
Click here to read Dr. Mason's paper on the effects of the moratorium: "The Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to the Gulf Region"
Click here to read about the effects of new energy taxes: "Regional and National Economic Impact of Repealing the Section 199 Tax Deduction and Dual-capacity Tax Credit for Oil and Gas Producers,"
Joseph R. Mason serves as the Moyse/LBA Chair of Banking at the Ourso School of Business at Louisiana State University and a Senior Fellow at the Wharton School.
SOURCE Joseph R. Mason