|
Pombo: Tax Big Oil by drilling in ANWR House Resources chairman urges congressional colleagues to get companies to reinvest profits in U.S. energy resources Rose Ragsdale For Petroleum News
Rep. Richard Pombo, R-Calif., sent a letter to his colleagues in the U.S. House of Representatives May 9 titled, “Do you want to tax Big Oil? Open ANWR.”
Pombo went on to summarize findings in an assessment by the Congressional Research Service that shows oil production from the coastal area of the Arctic National Wildlife Refuge could generate anywhere from $112 billion to $173 billion in corporate income taxes and royalties for federal coffers.
The letter was directed primarily at Democrats who have criticized the Bush administration for not taking action to curb high oil prices from which oil companies are gleaning record profits. Democrats also have accused the Republican-led Congress of providing $10 billion in tax cuts to oil companies at a time when Americans face rising gasoline prices.
First time tax revenue considered “With everyone screaming about taxing the oil companies, we decided to take a look at the tax revenue we could expect from oil production in ANWR,” Pombo aide Dan Kish said May 10. “To my knowledge, this is the first time anyone has considered this. Up until now, we’ve been arguing over whether revenue from the bonus bids during leasing would generate $2.4 billion or $10 billion for the federal government.
“I’d say $112 billion is a bit of money, even in this town,” Kish added.
The CRS report concluded that federal revenues in 2006 dollars over the life of fields covering just 2,000 acres in ANWR could generate $76 billion in corporate income taxes and $35.5 billion in royalties from mean production of 10.3 billion barrels of oil sold for an average of $75 a barrel. Geologists estimate that ANWR has a 50 percent chance of containing 10.3 billion barrels of technically recoverable crude.
If production from ANWR fields climbs to their upper-end estimate of 16 billion barrels, federal revenue would jump to $173.3 billion, $118 billion in corporate income taxes and $55 billion in royalties.
The CRS assessment also estimated federal revenue from taxes and royalties if oil prices dropped to $60, $30, and even $10 a barrel. Projections with mean output from ANWR fields of 10.3 billion barrels totaled $89.3 billion, $44.7 billion and $14.9 billion in federal corporate income taxes and royalties, respectively. At the upper-end production estimate of 16 billion barrels, federal revenue estimates totaled $138.7 billion, $69.4 billion and $23.1 billion, respectively.
Alaska North Slope crude sold May 10 for $70.53 a barrel, up $1.44 from the day before. Oil produced in Alaska is sold entirely on the West Coast, with sales to foreign markets prohibited since 2000.
Kish said Pombo, who chairs the House Resources Committee, is convinced that the best way for Congress to address the oil companies’ profits is to encourage them to reinvest in U.S. energy resources.
“Many Democrats have called for new taxes on ‘Big Oil’ as record-high prices have led to massive profit margins,” Pombo said in a statement May 2. “And for once I agree with them — Congress should open ANWR, put ‘Big Oil’ to work increasing American supplies to lower prices, and generate massive new tax revenues at the same time. How could tax-hungry Democrats say no to that?”
Enough is enough Pombo accused environmental fundraising groups and obstructionists in Congress of using the ANWR energy issue as a cash cow for two decades. “Enough is enough. It is time to make this resource a cash cow for each and every American taxpayer,” he said. “This production would create jobs, lower prices, grow the economy and make our country more secure. At today’s prices, the mean estimate of ANWR’s recoverable oil alone represents a $780 billion economic decision.”
“If we applied that same calculus to the (outer continental shelf) in areas where drilling is now off limits, it would give use eight times the revenue projected from ANWR, or over a trillion dollars,” Kish said.
The CRS assessment assumed the federal government and the state of Alaska would split revenue from ANWR oil production 50-50. The estimate, however, does not include secondary economic benefits from ANWR output nor federal taxes and royalties on potential natural gas production.
“Assuming the State of Alaska has similar corporate income tax rates, the state would collect a similar amount of revenue,” Kish said. “I don’t have to tell you what that would mean for Alaska.”
| 