About Us

Contact Information

How You Can Make a Difference

Legislative Action Center


Policy Information Center


Religious Liberty

Send Me
More Information




Higher Taxes on Energy Companies Passes House

For Immediate Release. January 19, 2007The House of Representatives on January 18, 2007, approved a $14 billion over 10 years tax increase on energy companies by a vote of 264 –163. The $14 billion in increased tax revenues would be used to fund renewable energy resources.

Energy companies would be forced to pay more for drilling royalties by this legislation. However, helping to create the oil crisis in the 1970's was a $3 per barrel fee imposed on all oil by former President Gerald R. Ford that continued throughout the Carter administration. Furthermore, energy tax increases can backfire and hurt consumers by reducing domestic energy supplies as was the case when the infamous windfall profit tax on oil imposed under the Carter administration in 1980 was repealed under the Reagan administration. Americans learned a hard lesson in their pocket book that this approach does not benefit them as was the case in 1980 when punitive actions resulted from the anger over high prices and Big Oil. Modifying the current tax code will do nothing to curb the recent increases in energy prices and over the long-term would be counterproductive.

“The legislation calls for government subsidies for uncompetitive renewable energy which such preferences for alternatives to fossil fuels have failed to make these technologies competitive and are unlikely to do so in the future. Simply, this bill redirects corporate welfare from the oil industry into renewable energy development and does nothing to reduce the tax burden on the American taxpayer. This will eventually result in higher consumer prices," said president of the American Voice Institute of Public Policy Dr. Joel P. Rutkowski .

The measure will have a trickle down effect on this nation's economy as well as harm its domestic energy industry. For example, in the form of higher prices for gasoline and home heating oil, the increased taxes on the energy companies will be passed on to the consumer. America 's domestic energy industry will be weakened. Since the energy industry would be left with less after-tax revenue to reinvest, new exploration and production would be discouraged as a result of higher taxes. And jobs that pay an average of $19.34 an hour for oil and gas extraction would be lost. Ultimately, higher prices for consumers would result. The increased taxes would lead to lower domestic supplies of oil and gas and a greater dependency on imports from the Organization of Petroleum Exporting Countries (OPEC) and Venezuela which represent nations hostile to the US to meet the nation's energy demands.

Also, higher taxes on energy companies will make their refineries less competitive resulting in the lose of high paying jobs (For example, the average salary is $28.41 an hour for refinery workers). To increase their competitiveness, energy companies will relocate their refining capabilities to nations that have lower operating costs. Furthermore, since this nation has not built a new refinery since 1976, its domestic refining ability would further be reduced resulting in the increased importation of gasoline from foreign nations.

Furthermore, Congress and the White House have promoted the use of alternative energy such as ethanol. However, one reason for the increase in gasoline pricesrecently is that ethanol which is produced mostly from corn costs more than gasoline and adds to the final cost of the product. Furthermore, more than double earlier government predictions, U.S. factories producing ethanol for automobiles may consume as much as 50 percent of the nation's corn crop next year which will create competition for grain stocks that could increase supermarket prices for cereals, meat, eggs, and dairy products. Price hikes will be passed on to consumers who purchase anything from milk to pork chops as a result of the growing competition for corn. Such actions will only add further to the cost of living for the American consumer.

Finally, as a result of the increased taxes and royalties on energy companies the value of millions of Americans retirement funds will be reduced as the stock prices on oil companies declines. As earnings of energy companies decline so too will the stock prices effecting shares that are owned by millions of investors through 401 (k) plans, retirement plans and pension funds.

“In the end if this legislation becomes law the big loser once again is the American consumer and worker. Jobs will be lost, Americans' savings and investments will decline, the cost of living will increase, the dependence on foreign oil will be greater, and as was the case during the Carter administration, an oil crisis will develop. As a result the economic growth of this nation will be slowed putting the national security of the U.S. at risk at a time of war, “said Dr. Joel P. Rutkowski.

For Interviews Contact:

Joel P. Rutkowski, P.h.D.
President, The American Voice Institute Of Public Policy


Back to the American Voice Institute of Public Policy Home Page