Domestic Energy Producers Alliance Responds to Latest Episode of Energy 'Blame Game'

Online, April 28, 2011 (Newswire.com) - In this latest episode of the "blame game," President Obama is harming the domestic U.S. oil and gas industry while claiming to punish the major international oil companies, the Oklahoma City-based Domestic Energy Producers Alliance (DEPA) said Wednesday.

"It's not about us in the industry, it's about all of us in the U.S.," said DEPA President Mike Cantrell. "With gasoline prices soaring above $4 per gallon, and likely to rise more, Americans need and deserve straight talk from elected officials, not political rhetoric."

The President has tried to blame "Big Oil" when, in actuality, the tax provisions he calls subsidies have, for the most part, not been available to major integrated, international oil companies for a number of years, he said. President Obama has shot at the major oil companies like Exxon Mobil, but the bullets are hitting domestic independent producers who provide millions of high-paying American jobs.

"Industry tax provisions such as percentage depletion and the expensing of intangible drilling costs (IDCs) continue to provide the capital that domestic independent drillers who drill 93 percent of the wells in the United States have used to create a sea change in our energy position in America over the last few years," Cantrell said. "For the first time in decades we have increased our reserves in both oil and natural gas."

President Obama has advocated the elimination of percentage depletion and IDCs in the $4 billion annual "tax break repeal" for the oil and gas industry. Savings from elimination of percentage depletion and IDC's would constitute more than half of the $4 billion Obama has targeted, he said.

"Percentage depletion was eliminated from the tax code for major, integrated oil companies by Congress more than 30 years ago," Cantrell said. "President Obama has his facts completely wrong when he cites the depletion allowance as a tax break that benefits big oil companies."

Also targeted for elimination is the expensing of IDCs, which makes little sense, he said. Major oil companies who drill primarily outside the United States benefit very little or not at all from the IDC tax provision.

"Current industry tax provisions are not subsidies," Cantrell said. "Rather, they allow independent producers to keep more of their own money in order to generate more of the energy America needs while at the same time providing millions of jobs at two times the national average for manufacturing jobs."

Cantrell said independent onshore oil and gas producers drill 93 percent of the wells and typically invest 100 percent of their capital, then borrow more money to keep drilling.

"Because American independent energy companies are allowed to reinvest their money back into drilling as opposed to simply handing it over to the government, we've now reduced our dependence on foreign oil to less than 50 percent. And natural gas is abundant, and simply cheap," Cantrell said.

He said the latest rhetoric from Washington, D.C., is "typical" of Beltway mentality and evidences their lack of understanding of America's energy situation.

"The straight answer to $4 a gallon gasoline is, America has plenty of oil and gas still waiting to be tapped," Cantrell said. "If this president would simply abandon the blame game, the industry could, and would, produce exceedingly greater amounts of oil and gas for America."