Tax and Trade

Companies making up America’s oil and natural gas industry are some of the largest taxpayers in the U.S. and their overall tax expenses are significant. According to the , the effective income tax rate of the major industry producers was 40.4% (based upon income tax expense of almost $85 billion), which was significantly higher than the statutory U.S. tax rate of 35%. However, even these amounts do not make up the full tax burden paid by these companies. Additional taxes and fees, such as production taxes, import duties, and property taxes, paid by major industry producers in 2007 amounted to another $12 billion of revenue for various governments. Finally, just these companies alone collected and remitted to government agencies over $48 billion in excise taxes imposed on its products. All of these taxes generate a significant obstacle toward their ability to operate efficiently and stay competitive in the world market.

Specific Tax Positions
API supports the implementation of sensible taxing policy that considers broad based approaches over industry specific proposals, supports efficient approaches to tax collection and weighs the impact of taxes on the ability of U.S. based business to compete in the world market place. Toward that end, we are working to address the Administration’s FY 2010 budget outline that includes at least $80 billion in tax increases on the U.S. oil and natural gas industry. These tax increases would discourage domestic oil and natural gas production and could lead to a greater reliance on foreign imports, fewer well-paying American jobs and higher energy costs to consumers. We believe it is important to note that, at a time when we need to work to turn this economy around, these proposals undermine the creation of jobs and this nation’s energy security.

State and Federal Motor Fuel Excise Taxes
API also focuses on a limited number of state tax issues involving the industry. For example, we review various state and federal motor fuel excise taxes to update consumers on how much tax is charged when they purchase motor fuel in their state.