September 30, 2014
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Maybe not politically correct, but give oil & gas due thanks
Robert L. Bradley Jr.

Politicians in Washington continue to pick favorites when it comes to energy.

At the bottom as least favorite are oil and natural gas companies, which have again come under fire by the Obama Administration after their release of quarterly earnings. Policymakers see profits and think tax increases not a good thing in a free economy.

At the top as most favorite are the politically correct renewables solar and wind. They draw generous praise from green-minded politicians and receive lavish taxpayer subsidies.

But as the Solyndra bankruptcy demonstrated, renewables have seriously failed to live up to the hype. "Green" tech companies have taken in tens of billions in taxpayer support and generated little in the way of jobs, sustainable economic activity or consumer benefits.

Meanwhile, America's oil and natural gas industry continues to make an outsized contribution to our economy. It's time to check that list of favorites and rethink this preferential treatment.

The country's largest gas and oil companies just released the year's first-quarter earnings. Just as expected, the left was quick to launch its familiar attack on the industry, condemning it for its apparent excess.

This quarter, Chevron generated $6.5 billion. Shell's earnings rose to an impressive 16 percent to $7.3 billion. ExxonMobil, the leading U.S. oil company, posted a whopping $9.45 billion. The numbers are certainly eye-popping, but they are far from excessive. Just consider what those profits mean for the economy.

1. What's excessive about creating jobs?

The oil and natural gas industry supports approximately 9 million American jobs. Major new projects can create steady employment for entire communities. The Barnett shale, for instance, supports 100,000 jobs in northern Texas alone. Natural gas production in the Marcellus contributes double that to the Pennsylvania economy.

And job growth in oil and gas has a profound multiplier effect in other industries from manufacturing to transportation to accounting. In fact, one analysis from PricewaterhouseCoopers found that each oil and gas job indirectly supports three other positions in the rest of the economy.

The Labor Department estimates that total American oil and gas jobs jumped by half in the past decade, making this industry one of the few to keep adding positions despite the recession.

2. What's so excessive about investing in America?

In 2010 the most recent year of complete data the oil and natural gas industry accounted for almost a half trillion dollars in benefits to the American economy. This estimate is comprised of $266 billion in new capital spending, $176 billion in paid wages, and $35 billion in stock dividends.

3. What's so excessive about generating tax revenue?
Taxes paid in the United States by many of the biggest oil and natural gas companies actually exceed their domestic earnings. For example, over the past five years, ExxonMobil has paid three times more in U.S taxes ($60 billion) than its U.S. earnings ($19 billion).

State and municipal governments across the country are staring down massive budget shortfalls. The federal government has racked up $14 trillion in debt. Strong tax generation from oil and gas firms provides some much-needed relief on the public balance sheet.

4. What's excessive about improving returns on retirement investments?

When oil and gas stocks thrive, the benefits aren't confined to a cadre of industry elites. Nearly 50 percent of industry shares are held in public and private retirement plans. Individual investors own another 20 percent.

As a result, when this industry grows, the retirement savings for millions of average Americans get stronger. After the devastation wrought on 401(k)s and IRAs during the recession, this boost has been vital.

5. What's excessive about plentiful energy?

Remember in the 1970s when Americans had to wait in long lines to buy rationed fuel? In addition to driving uncertainly, people worried about having enough home heating oil through the cold of winter. In some parts of the world, petroleum products are still very scarce and a luxury.

But here in America, energy is easily accessible at competitive prices. That's due to the ability of the oil and gas sector to find, develop, produce and market a product that remains vitally important in American life. It's time to give thanks where thanks are due.

Robert L. Bradley Jr. is the CEO & Founder of the Institute for Energy Research and author of seven books on energy history and public policy. He blogs at www.masterresource.org.


Comments
1 comment on this item

What about the environment, or national security concerns over remaining energy dependant on fossil fuels ???

You fail to mention that global warming is a real problem. In fact, 2012 so far is the warmest year ever recorded. This continues with the warming trend we have been seeing now for the past 4 decades. Not to mention acid rain, oil disasters including the Exxon Valdez, the tanker off New Zeland, the spill off RI (which was devestating to the fishing industry), the oil spill disaster in the Gulf of Mexico last year to name a few of the many examples.

How about the wars and confilcts already do to oil and it's only going to get worse, especially if we do not act now to at least reduce our dependancy.

Your article is short sighted, purely economic driven. So one solar company didn't work. Lets harp over and over on that example and try to deceive people in thinking that it is a waste of money to invest to alternative energy. Like anything new there will be some bumps in the road.

There is an entire economic industry waiting to advance and flourish if regulations and nimbys could be averted.

Every time that Wall Street speculators drive up the price on oil and gas our economy takes a huge hit. Wouldn't it be nice not to be at their mercy? Or worrying if the next conflict in the Middle East is going to spike home heating oil and gas prices?

The recession has made it more difficult to make the advancement of alternative energies a smooth one.

I applaud what is happening in the auto industry in regards to hybrids and the demand for better fuel mileage. Toyota has been successful for years because they have had the best vehicles in fuel mileage. Unfortunetly with the devestating tsunami that caused horrific damage in their nation and of course the problems with nuclear energy which is another story.

Solar companies are creating inventive ways for more power to be produced in a smaller area by going vertical with skyscraper type solar collectors.

It all comes down to waste, greed, and simply not caring for the environment when people want the drill baby drill mentally to continue. Oil is not going anywhere any time soon. However, it is not the long term answer to our energy policy, our future, and our environment.

I would think with people struggling and the working poor fed up with all the expenses that they would be seeking every which way tor educe costs. Whether it be by investing in a hybrid, or fuel efficient vehicle. Using led bulbs to reduce power expenses. Switching over to wood pellet stoves, and even natural gas for now is a better alternative than oil. Solar panels on the roof to heat the hot water tank, etc...

So please don't give me the same old story that oil is the way to go.

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