Will energy-state senators Udall and Heinrich support provisions of Obama’s recently released budget that, once again, go after “Big Oil”? If their voting records are any indication, probably so, even though the oil and gas industry provides more than 13,000 direct jobs in New Mexico at an average annual salary of $64,000 and pours $2.5 billion a year into the government coffers of New Mexico.
“Big Oil” is paying a mere 41% in income taxes, compared to a wide array of other industries like “Big Computer” which are paying 25%. And whereas Apple Computer and most other industries receive a 9% tax deduction for “domestic production activities”, oil and gas companies get only a 6% deduction for those activities.
As the following chart illustrates, the oil and gas industries’ profit margins are lower than other major industries while it also pays higher taxes:
But Obama, along with Udall, Heinrich and others, thinks that is too generous and wants to incentivize one of the few industries that is actually creating jobs in America to move those jobs overseas. His recently released budget would remove current deductions and further penalize America’s largest oil and gas companies, four of which were in New Mexico’s top 10 producers as of 2011: Conoco Phillips, BP America, Exxon Mobile, and Chevron USA.
Energy-state senators Heinrich and Udall have repeatedly voted against the oil and gas industry and have pledged their support for taxes that target them, regardless of the negative impact on New Mexicans.
Studies estimate that a new energy tax will not only backfire by costing the U.S. Government $144 billion loss in revenue over 13 years, but will result in the loss of 170,000 direct and indirect jobs in the energy industry by 2014. Domestic oil production is also expected to decline by 700,000 barrels a day, a genius move when Americans are paying nearly $4.00 per gallon.