Maybe not politically correct, but give oil & gas due thanks
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.