New tax would slow economy
As lawmakers in Washington, D.C., propose yet another battery of taxes specifically designed to punish the natural gas and oil industry, you must wonder if they ever bother to seriously consider the ramifications of continually attacking one of their favorite targets.
PricewaterhouseCoopers recently issued new analysis highlighting the significant contributions the natural gas, oil and fuels industries make in our country, including jobs, labor income and value added. The report shows that the industry has widespread economic impact throughout all sectors of the economy.
In 2019, for example, the natural gas and oil industry supported 11.3 million total jobs in the U.S., which resulted in $892.7 billion in labor income, or 6.8 percent of the nation’s overall total. The overall impact the industry had on our country’s GDP was nearly $1.7 trillion, or about 8 percent. Additionally, natural gas and oil companies generate billions in revenue for the federal and state governments in rent, royalties, excise taxes, severance tax and income tax payments.
In Ohio, which enjoys some of the nation’s lowest energy costs, the industry directly and indirectly supports 375,000 total jobs, or 5.3 percent of Ohio’s total employment. Natural gas and oil operations generate an additional 3.8 jobs in Ohio’s economy for each direct job in the industry. It also provides $24.7 billion in labor income and contributes $58.8 billion to Ohio’s gross domestic product. Ohio’s state motor fuels and severance tax collections alone generated more than $2.3 billion, according to the U.S. Census Bureau in 2019.
And here in the Mahoning Valley, natural gas and oil operations give us a sustainable, competitive advantage over most other communities in the nation on which to grow the economy. We have benefited from many billions of dollars in direct investment creating thousands of new jobs and producing everything from pipes to electricity. These have had a positive impact on our labor halls and the tax bases of our local governments, including schools.
There is more to come if we continue to do this correctly.
However, should U.S. tax code changes target the natural gas and oil industry for another punitive measure, stripping it of standard allowances, it is exceedingly likely that high-paying jobs will be lost, energy costs will rise for American consumers and future capital investment will be jeopardized.
Contrary to what some claim, the natural gas and oil industry pays taxes on the same level playing field as the rest of the manufacturing sector. Since its inception, the U.S. tax code has allowed corporate taxpayers across the manufacturing sector, including the natural gas and oil industry, to recover costs related to job creation and other operational investments. These common tax mechanisms do not change how much tax is paid, only when the tax is paid, allowing companies to invest in developing technologies and other sustainable practices.
Few industries have done more to facilitate our nation’s growth by providing the affordable, abundant and reliable energy needed to fund schools, infrastructure and other critical social services needed to keep our country moving and its citizens safe and secure.
It is important that the Valley’s federal elected delegation, and all of Congress, keep these standard allowances for the natural gas and oil industry. The Valley, after all, plays a significant role in meeting our nation’s energy needs.