Natural gas organizations band together against proposed taxes

 

In a March 17 letter to the U.S. Congress, the Natural Gas Council said that some proposed taxes could discourage production and raise prices for consumers.

The council is comprised of four industry organizations: the Independent Petroleum Association of America, the American Natural Gas Association, the Interstate Natural Gas Association of America and the Natural Gas Supply Association. Collectively, they represent the entire U.S. natural gas industry – “from production companies, to interstate pipelines, to local natural gas distribution companies to customer groups,” according to the statement.

The organization writes the natural gas projects are at risk due to “dramatic reductions in natural gas prices” and, therefore, reduced cash flow, and less available credit for funding. The NGC argues that proposed energy tax changes are counterintuitive to President Barack Obama’s apparent affinity toward natural gas as an alternative to foreign oil.

“If these taxes are imposed on the industry, not only will prices rise for consumers, but tax and royalty revenues to the federal and state treasuries will diminish and well-paying American jobs will be eliminated,” according to the letter.

Below is the letter in full:

March 17, 2009

Hon. Member of Congress

U.S. House of Representatives / U.S. Senate

House / Senate Office Building

Washington, DC 20515

Dear Member of Congress:

The member organizations of the Natural Gas Council represent virtually the entire American natural gas industry – from production companies, to interstate pipelines, to local natural gas distribution companies to customer groups. Natural gas is one of the nation’s most important energy resources; 85 percent of it is produced by American companies here in the United States.

Clean-burning natural gas is abundant, affordable and American, and the Obama administration and Congress must recognize it as essential to addressing global climate concerns. At present, natural gas is the only fuel both abundant enough and clean enough to power a carbon-restricted economy effectively. At the same time, it can serve as a critical supplemental fuel, particularly for wind and solar power generation.

New American investments in U.S. natural gas production come from three funding sources:  selling natural gas, obtaining credit from lenders and securing private and institutional investors willing to commit capital to high risk ventures. Unfortunately, new U.S. natural gas projects are at risk.  Dramatic reductions in natural gas prices this past year have reduced cash flow to producers, while the credit crunch has limited access to capital and investors are more cautious than ever.

The Obama administration’s tax proposal will radically shift investment incentives for developing American natural gas – in some cases changing policies that have been in place since 1913. If American natural gas production decreases, supply will shrink, putting upward pressure on the price of natural gas for the 171 million Americans who rely on it to fuel their homes and businesses. If these taxes are imposed on the industry, not only will prices rise for consumers, but tax and royalty revenues to the federal and state treasuries will diminish and well-paying American jobs will be eliminated.

These results run counter to the Obama administration's agenda of cleaner energy and less dependence on foreign energy resources.  We urge you to reject these unjustified changes to energy tax policy.  Congress must develop rational national energy strategies – strategies that rely on American energy first, including clean-burning, abundant American natural gas.

Sincerely,

Barry Russell

President & CEO, IPAA

Dave Parker

President & CEO, AGA

Skip Horvath

President & CEO, NGSA

Don Santa

President, INGAA

jtronche@bizpress.net