The high profile rejection of the Keystone XL Pipeline by the White House left 20,000 jobs unrealized[1], but this slight to the unemployed and underemployed pales in comparison to the economic effect that the President’s desired energy tax increases will have on American consumers. Punitive tax increases on the production of oil and gas may well fund the President’s favorite left-wing programs in the short term, yet the long term loss in jobs and tax revenue would strike a serious blow to the fragile economy.

An economic analysis performed by LSU professor Dr. Joseph Mason clearly shows that increasing taxes on domestic oil and gas companies would give a leg up to foreign firms, while eliminating 155,000 U.S. jobs and slashing $68 billion from national wages. This transfer of wealth abroad would result in a net loss of $53.5 billion in federal revenue, which demonstrates that the Administration’s desired cash grab is more about currying favor with anti-oil activists during the 2012 election cycle than it is about balancing the budget.

If President Obama is serious about turning the tables on record unemployment rates, he should utilize the energy industry to create jobs, not continue to demonize one of the few sectors that continues to create good-paying jobs. Between shovel ready projects like Keystone XL, the vast offshore resources on our coasts and in the Gulf, and the 175 year supply of natural gas under North American soil, we have an amazing opportunity. Developing these resources will not only create jobs, but help reduce the debt and increase our energy security. Indeed, increasing domestic production will limit foreign control over the U.S. oil supply — an increasingly important goal considering the recent instability due to Iran’s threat to close the Strait of Hormuz.

Experts agree that oil and gas will drive the U.S. economy for the next several decades. Doubtlessly, President Obama’s campaign is facing significant pressure from environmentalists to put up a strong front against oil and gas production, but lawmakers must remain in touch with reality. Projects like Keystone XL will bring needed jobs to the economy. Higher energy taxes will send needed jobs out of the country.

The energy sector has continued to create jobs during the recession. In fact 1/5 of all private sector jobs created from 2003 to 2010 were in the oil and gas industry. Stifling this vital economic engine through higher taxes to fund more failed political experiments like Solyndra is unwise and reckless. U.S. jobs are on the line.

This incredible growth over the last four years of the recession has occurred despite attempts by the current White House to significantly increase taxes on the industry, a successful yearlong ban on offshore drilling in the Gulf, and a refusal to open oil and gas exploration in portions of the Atlantic and Alaska.

The President and his allies in Congress have repeatedly sought after increased energy taxes which would leave the U.S. less competitive against foreign energy companies. Their plan is to punitively eliminate a measure for domestic oil and gas firms which is meant to encourage repatriation and reinvestment of revenue earned overseas into the U.S.. The deduction is provided to all American companies operating overseas to ensure they have the necessary funds to compete and succeed against bigger foreign firms. In the oil and gas industry, the competition includes government owned and supported companies in China, Russia, Venezuela, and elsewhere. These tax hikes would have a broad impact.

The President has urged these punitive tax increases to support government jobs programs, but the effect would actually be the elimination of jobs. The immediate shock of the tax increases would be the loss of 155,000 U.S. jobs in the energy industry and many related fields supported by their operations, including medical services, dining, and finance. And while the increases may offer initial revenue, the dismantling of the industry would reduce the estimated $85 million paid in taxes, royalties, and rents every day by oil and gas companies. Over ten years, government modeling shows that the taxes would result in a net loss of government revenue totaling $53.5 billion. It quickly becomes clear that, far from creating jobs, these attempts are a job killer.

The oil and gas industry is important to the economy, and helps support over 9 million total jobs. The impact of the industry was evident during the recent moratorium on Gulf drilling when over 20,000 direct and indirect occupations disappeared. The EMSI analysis shows in detail that oil and gas companies are growing and creating thousands of well-paying jobs at a time when good jobs are hard to come by. As we head into 2012, an important election year for the President with a focus on the economy, it will be interesting to see whether he embraces the growth in this industry and works to encourage it, or continues to attack these companies; his job just might depend on it.

“We spend so much time theorizing about new steps government can take to create jobs that we sometimes overlook the jobs that are right in front of us waiting for government approval.

Take the proposed $7 billion Keystone XL oil pipeline running from Canada to the U.S. Gulf Coast. It would create tens of thousands of new jobs in construction, maintenance and refining. Secretary of State Hillary Clinton supports the project, yet regulatory hurdles remain. States like Nebraska, whose approval is overdue, need to get on board with Secretary Clinton and help push this massive jobs creation project through.

With millions of Americans clamoring for employment opportunities, there is no excuse to delay. A study released last month by the Woods Mackenzie research firm found that 1.4 million jobs and $800 billion in new government revenue could be created over the next two decades by removing barriers to increased domestic oil and gas production. These are high-paying jobs, available now, and private industry—not the taxpayer—is making the investment.

We need to support leaders who are working to realize the enormous potential of America’s oil and gas industry. I don’t agree with everything President Obama has done on the economic front, but it has been unfortunate to watch fellow Democrats not back him on energy projects like the Arctic Sea permits. To ignore these resources and economic potential is counterproductive.”

Read Congressman Ford’s piece here.  American energy companies could create some 1.4 million jobs over the next two decades – so long as the government lifts restrictions on boosting oil and gas production.  Ultimately, as Congressman Ford notes, “Americans are asking where the jobs are. The answer: They’re all around us. We need to get out of their way, now.”

Instead of embracing a potential 1.4 million jobs by expanding energy production and refining, the President proposed a $41 billion tax increase on the industry; a move which could cost 155,000 American jobs and $53.5 billion in government revenue. But these tax increases are not the only area where job growth opportunities aren’t being capitalized on.

The Keystone XL Pipeline, a project to link Canadian oil sands to U.S. refineries, has been on hold for three years while the U.S. State Department produced an environmental impact statement (EIS). The final EIS released by Sec. Hillary Clinton’s department earlier this year concluded that the project posed no significant environmental threat, so Keystone XL should be moving forward, right? Wrong. It is now facing further delays from a flurry of environmental activism, and approximately zero of the 20,000 immediate construction jobs the pipeline promises to create have been realized.

Activists oppose the development of Canadian crude oil, but fail to realize that development will go forward with or without approval of the pipeline. If the Administration does not move on the project, the energy resources and jobs will instead be shipped to China, a quickly emerging economic powerhouse rivaling the U.S. in the global economy.

The $7 billion privately funded project to build a pipeline from Alberta to several of the nation’s 148 oil refineries would generate billions in government revenue. This capital could then be reinvested in the country without raising taxes.

Conversely, the President’s jobs plan would use $140 billion on infrastructure updates by increasing taxes. While the nation certainly needs infrastructure updates, squeezing U.S. businesses of the dollars they could use to grow and hire, in an attempt to create stimulus jobs that offer nothing back to the economy, is a shortsighted strategy and business as usual in Washington, D.C.

Unfortunately, the rest of the country is suffering from a high unemployment rate and things are far from usual. Instead of pursuing costly and ultimately futile government temporary jobs programs the Administration should get out of the way and allow projects which create real jobs and capital, like Keystone XL to go forward. Over 15,000 U.S. companies are active in oil and gas exploration, supporting the employment of more than 9 million Americans. Administration support for this industry and job creating projects like Keystone will increase the demand for U.S. workers, reduce unemployment, and gain the President credibility as a job creator going into the 2012 election. On the other hand, tax increases and delays will only increase the demand for political spin to account for more losses in the jobs market.

The morning of the study’s release, Dr. Mason spoke at a Policy Briefing Breakfast hosted by The Hill entitled “Energy Policy & Deficit Debate” where he highlighted the findings from his study.  See the video below for highlights from Dr. Mason’s commentary.

Afterwards, Dr. Mason appeared on Fox Business Channel to discuss his study and the broad, harmful economic impact of repealing oil and gas tax incentives.  Click here to see the interview.

Read Dr. Mason’s full study here.

Our mounting debt and deficit is the result of a spending problem, not a revenue one. Yet, in a proposal released this week, Senators Robert Menendez (D-NJ), Sherrod Brown (D-OH), and Claire McCaskill (D-MO) show they’re still myopically focused on grabbing more tax dollars rather than being economic with the ones they already receive by unilaterally targeting the domestic oil and gas industry to eliminate tax deductions utilized by nearly all industries.

Couched in lofty rhetoric about reducing the deficit and lowering gasoline prices, the proposal is yet another attempt by Washington politicians to deflect blame away from themselves for our nation’s energy challenges. Their narrow focus could also come at a high cost to American families.

A 2010 analysis by LSU finance professor Joseph Mason calculated that eliminating the Section 199 credit and dual capacity deductions solely for domestic oil and gas companies, as the Senate bill proposes, would eliminate 154,000 jobs immediately, and cost the nation $341 billion in economic output. In the sponsor senators states, Missouri, Ohio, and New Jersey, the economic losses would total $1.38 billion, $7.63 billion, and $8 billion respectively by 2020. Hardly the antidote for a struggling economic recovery.

Moreover, the Senate legislation would add an additional cost to oil production, meaning higher prices at the pump, in the grocery store, and on the our monthly energy bills. This may not concern jet-setters like Sen. McCaskill; but for the average American facing $4 a gallon gas prices, it’s a difficult expense to swallow.

• The oil spill from the Deepwater Horizon was “an entirely preventable disaster.”

• An unclear chain of command, poor risk management and a communication breakdown specifically attributable to the Deepwater Horizon led to an environment aboard the rig conducive of an accident.

• A failure to disseminate crucial information, and a tendency to explain alarming onsite test results as the best possible scenario, with no clear supervision to correct this, led directly to the uncontrolled well blowout.

From these revelations, even from this overtly political commission, it is clear that this isolated incident can be attributed to one company’s failure to adhere to well-understood industry norms.

Click here to read the report in its entirety.

This report comes to light as Interior Department head Ken Salazar is set to ask Congress for more money for Interior.  Yet the Obama Administration’s continued moratorium on offshore drilling affects the $95 million paid into the federal treasury every day by the oil and gas industry.  Increased energy production grows the economy, reduces the federal deficit (without raising taxes), and increases employment.  Why does the Obama Administration continue to obstruct and prevent energy production in the Gulf of Mexico?

• The oil spill from the Deepwater Horizon was “an entirely preventable disaster.”

• An unclear chain of command, poor risk management and a communication breakdown specifically attributable to the Deepwater Horizon led to an environment aboard the rig conducive of an accident.

• A failure to disseminate crucial information, and a tendency to explain alarming onsite test results as the best possible scenario, with no clear supervision to correct this, led directly to the uncontrolled well blowout.

From these revelations, even from this overtly political commission, it is clear that this isolated incident can be attributed to one company’s failure to adhere to well-understood industry norms.

Click here to read the report in its entirety.

This report comes to light as Interior Department head Ken Salazar is set to ask Congress for more money for Interior.  Yet the Obama Administration’s continued moratorium on offshore drilling affects the $95 million paid into the federal treasury every day by the oil and gas industry.  Increased energy production grows the economy, reduces the federal deficit (without raising taxes), and increases employment.  Why does the Obama Administration continue to obstruct and prevent energy production in the Gulf of Mexico?

With all the problems surrounding the budget deficit, why does the President continue to stall the economic lifeline of oil and gas production in the Gulf, and then propose drastic tax increases for U.S. companies developing these supplies? Are energy workers second class citizens? And when can I go back to work?

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See the video here.

Oil and gas industry representatives worked closely with offshore regulators to prepare the MWCS, investing considerable resources to create the most expensive well containment mechanism ever built. This should be more than enough for the government to lift their arbitrary moratorium and let our southern coast energy workers return to work. The ongoing moratorium continues to devastate small and large businesses alike in the Gulf. Seahawk Drilling, a household name in the world of domestic energy, declared bankruptcy just last week, unable to earn money and pay off the substantial capital investments necessary to afford expensive drilling equipment.

Small businesses such as Oilfield CNC Machining, a small parts manufacturer in Broussard, LA, are being affected as well. This company may have to close its doors as early as June if the government continues to block production. The energy workers in the Gulf have been excluded from the jobs conversation going on in DC and all but ignored at the discussion table regarding the moratorium. If the energy lockdown in the Gulf and elsewhere were truly about safety, it would seem hard for the federal regulators to ignore the new well containment system, especially since it was crafted in conjunction with the government to meet specific qualifications. But we know that the oil embargo has never been about safety. That is why, as with everything else in this long, twisted saga, the Administration’s predictable response will be to cast doubt on the effectiveness of the MWCS in order to preserve their stranglehold on domestic energy production in the Gulf. The government, in other words, will once-again move the goalposts to keep their anti-oil agenda in tact.

Directly following the sinking of the Deepwater Horizon, the President brought together a panel of experts to provide advice on how to proceed with Gulf drilling. Before presenting the expert report, White House environment czar Carol Browner’s office edited the report to make it appear the panel was in favor of the moratorium, a claim the experts have subsequently denied. It went forward anyway.

A federal judge overruled the moratorium as an inappropriate response, so the Department of Interior went around them and issued another moratorium with slightly different wording. The agency is now facing contempt charges.

The President appointed a Spill Commission to study the causes of the oil spill; a panel with plenty of oil and gas opponents and green energy lobbyists or lawyers, but not one expert in the drilling process. Therefore, it was no surprise that the panel blamed the entire industry for the spill despite several credible reports pointing to BP’s poor safety management record as the culprit. The commission’s report has ignited a discussion on Capitol Hill, and continued foot dragging by legislators teamed up with the Administration seeking to end Gulf drilling. Meanwhile, for their part, the Department of Interior has continued to freeze the permit process in both the deepwater and shallow waters of the Gulf.

Throughout this poorly executed federal response, the Gulf continues to suffer even after the spill was capped and the beaches were cleaned. Well over 20,000 jobs have been eliminated in the region, while billions in economic activity and government tax revenue go unrealized, crippling the support system for the new influx of unemployed.

Not willing to sit on their hands, ExxonMobil, ConocoPhillips, Chevron, and Shell took action immediately after the spill.  The result is the Marine Well Containment System, which is designed to not only cap a well, but cover it and catch the oil should the well prove difficult to cap, as was the case at the Macondo well last April. These four companies should be commended for stepping up to the plate. We can only hope the Administration and regulators take notice of the system, and take the leash off needed domestic economic growth from energy production by issuing offshore drilling permits. The government is running out of excuses for refusing to release their self-imposed embargo on Gulf energy production, job creation, and economic prosperity.