Bob McCarty Writes

The findings of a new study commissioned by the American Petroleum Institute indicate that the Windfall Profits Tax — or any similar tax proposal — likely would cause severe job loss, reduce household income and slow economic growth. In other words, it could be exactly the wrong medicine for our ailing economy.

Although it appears President Barack Obama has tabled his plan for a WPT, API officials decided several weeks ago to commission a study about the potential impact of the tax on the oil and natural industry and the economy.  That study found that the tax could result in an estimated average decline in domestic crude oil production of approximately 21-26 percent annually, with imports of crude oil increasing by 13-18 percent annually.

Additionally, by 2030, the proposed legislation is estimated to do the following:

• Cause a net loss of between 370,000 to 490,000 total jobs from baseline levels;

• Reduce U.S. gross domestic product by roughly 1 percent, or $240 billion; and

• Increase U.S. imports of crude oil by up to 18 percent in 2030 and reduce U.S. domestic production of crude oil by up to 26 percent in the same year.

“Any taxes or combination of taxes similar to a windfall profits tax would likely undermine the nation’s energy security by discouraging domestic production and would hurt the economic security of Americans by reducing household incomes and job opportunities,” said API President Jack Gerard.  “Especially in these tough economic times, we need policies that spur economic growth, create jobs and encourage the development of oil and natural gas resources that belong to the American people.”

As explained by Gov. Sarah Palin (R-Alaska) in a recent commentary in the Minneapolis Star-Tribune, economic growth policies must allow for an expansion of drilling opportunities in places like the Alaska National Wildlife Refuge:

If we don’t move now to enact a comprehensive energy policy that includes domestic oil and gas production, including ANWR, we will look back someday and regret that we failed to perceive a critical crossroads in the history of America. It’s not overly dramatic to say our nation’s future depends on the decisions made by the federal government over the next few months.

For more information, the full text of the study and a podcast are available here