Energy and President Obama's Budget

President Obama has been unfailing in his desire to punish the U.S. domestic energy industry. Of course, attacking so-called "Big Oil" might score some points with the president's political base, but in reality, it is an attack on the hundreds of thousands of people and the thousands of small firms working in the oil, gas and coal industries, for example, not to mention energy consumers, including individuals, families and businesses of all types and sizes.

This presidential hostility came through loud and clear, once again, in the proposed Obama budget.

Over ten years, the oil, gas and coal industries would get his by an estimated $29.6 billion in tax increases. These are listed as the elimination of "fossil fuel preferences" in the budget, but they amount to nothing more than eliminating legitimate tax deductions and measures.

And at least another $110 billion in tax hikes are proposed that would fall disproportionately on the energy industry.

In the end, this turns out to be the same list of energy tax increases that the President has been long pushing. Of course, this agenda of jacking up taxes on domestic energy producers is an odd choice if the President truly supports increased energy production at home, and the goal of boosting job creation.

The reactions from key industry voices were on target.

For example, Jack Gerard, President and CEO of the American Petroleum Institute, warned, "Increasing our taxes would push oil and natural gas investment overseas and diminish job-creation and economic activity here at home. After a handful of years, we would see less domestic energy production - particularly of natural gas - more imports, fewer new jobs, and, eventually, depressed tax, royalty and other revenues."

And American Fuel & Petrochemical Manufacturers President Charles T. Drevna said, "It's disappointing that President Obama is once again proposing to bar companies that produce oil and natural gas and that manufacture fuels and petrochemicals from taking the same business tax deductions as other industries. If the president's proposal is enacted by Congress it will drive up energy costs for American consumers and prevent the creation of desperately needed new jobs for American workers."

But given the President's recent decision not to approve the Keystone XL pipeline, we should not be surprised by anything this administration does to deter expanded energy production and the jobs that come with it.

Finally, and as usual, whenever government decides to tax or regulate, it is small businesses that tend to get hit hardest. Consider the following from a February 13 Wall Street Journal report on the proposed energy tax increases: "But for some smaller oil and gas producers, some of the tax benefits play a larger role, because those producers have less capital in a capital-intensive industry."

There's no such thing as "Big Oil." Instead, it's just the many businesses of varying sizes and their employees that work in the energy industry ultimately serving residential and business energy needs. And all of these are under assault by the Obama budget plan.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.