New Oil Leases Would Raise More Than Taxes, API Says

Opening the eastern Gulf of Mexico and Atlantic Ocean to oil exploration would generate more revenue for the U.S. than increasing taxes on the energy industry, a trade group said.

Offshore production from areas closed to development would generate $149 billion for government through 2025, while higher taxes would cut output and reduce employment and investment, trimming revenue by $128 billion, the American Petroleum Institute said today in a report.

The Obama administration last year excluded the waters west of Florida and the Atlantic coast south of Delaware from drilling after BP Plc’s well ruptured in the Gulf of Mexico. These areas hold about 7.6 billion barrels of oil, according to API, which represents more than 450 energy companies.

“Our leaders must pursue a thoughtful, common-sense energy agenda that promotes U.S. job creation, economic growth and energy security,” the Washington-based group said in the report. “We encourage policy makers to increase energy production.”

Among API’s members are the largest U.S. oil companies, Exxon Mobil Corp., Chevron Corp. and ConocoPhillips.

The National Wildlife Federation, based in Reston, Virginia, and the Washington-based Ocean Conservancy said regions such as Florida’s Gulf Coast or Alaska have qualities that should preclude them from being exposed to an oil-drilling catastrophe such as BP’s spill, which spewed crude for 87 days and closed a third of the Gulf to fishing.

Drill or Import

“Our nation will require more oil and natural gas for decades to come,” API President Jack Gerard said today at a conference in Washington. “A lot of it will come from deep-sea wells. And if it doesn’t come from here, then we’ll import it.”

Opening the eastern Gulf, Atlantic coastline, the Rocky Mountains and Alaska to more drilling would create 160,000 jobs by 2030, according to API.

“The American people sent a message last November,” Gerard said. “They want lawmakers focused on an agenda that promotes growth. And they want job creation at the forefront.”

API failed to note the growing U.S. supplies of natural gas from shale developments, billionaire oil investor T. Boone Pickens said today in an e-mailed statement. Natural gas should be used to reduce the nation’s dependence on imported diesel, Pickens said.

“This is, after all, a group that includes and represents foreign oil companies,” Pickens said about API. “No one should be fooled by this report.”

API members include London-based BP and the U.S. subsidiary of Saudi Aramco, the world’s largest state-owned oil company.

Climate-Change Rules

The trade group, which also represents oil refineries, said Congress should take a “thoughtful and balanced” approach to climate-change polices, rather than proceeding with Environmental Protection Agency rules. The EPA began regulating carbon-dioxide pollution from electric power plants and refineries on Jan. 2.

“The oil and gas industries spent over $135 million on lobbying and campaign contributions last year,” Jeremy Symons, National Wildlife Federation senior vice president for conservation and education, said in an e-mail. “Now they’re clearly sending a message to Congress that it’s time to cash in.”

To contact the reporters on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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