Who are America’s independent producers?
The Independent Petroleum Association of America (IPAA) has represented thousands of independent oil and natural gas producers for more than 80 years.While operating in more than 30 states, these independent business owners drill 95 percent of the oil and natural gas wells in the United States – accounting for 85 percent of American natural gas production and 54 percent of American oil production.
America’s independent producers are job creators.
- Onshore independent producers –companies with an average of just 12 employees – supported 2.1 million American jobs in 2010, a figure that will rise to 2.6 million jobs by 2020.
- One out of every 62 jobs in the United States is attributable to independents’ production activities.
- Independents’ contributed nearly $321 billion in economic activity, accounting for 2.2 percent of the U.S. gross domestic product (GDP) in 2010.
- If the onshore independents’ business ecosystem was a state, it would rank #15, based on the $320.6 billion of value creation in 2010 (independents’ onshore economic activity is only expected to rise over the next 10 years, with a contribution slated to be in the trillions).
- Independent oil and natural gas companies operating in the offshore Gulf of Mexico accounted for more than 200,000 American jobs in 2009. Of these jobs, 121,000 were generated by independents in the deepwater Gulf of Mexico alone.
- In 2009, independents operating in the offshore Gulf of Mexico accounted for $38 billion in economic benefits.
Independent producers provide much needed revenue to the U.S. Treasury.
- Independents' onshore upstream activity generated $30.7 billion in personal income taxes (federal and state), sales tax and excise taxes in 2010.
- Independents' onshore upstream activity generated $38.4 billion in corporate taxes, severance taxes and federal royalty payments in 2010.
- Independent producers in the offshore Gulf of Mexico generated $10 billion in federal and state revenue and royalty payments in 2009.
Top Issues Facing America’s Independent Producers
- Threatened by Tax Hike
Nearly two-thirds of America’s independent producers are small businesses. A key factor for independents’ business plans is much-needed certainty within the industry tax structure. America’s independent oil and natural gas producers reinvest as much as 150 percent of their cash flow back into American production, which helps create more good-paying jobs and increase energy supplies here in the United States.
Historically, America’s independent producers have been able to deduct the costs associated with drilling for oil and natural gas that have no salvage value. These provisions enable oil and gas producers to deduct certain costs of doing business, similar to many other American industries, while ensuring their ability to invest in new energy production here at home.
Eliminating the tax deduction for drilling costs at current tax rates (President Obama’s budget proposals) would cut independents’ capital budgets by 25 percent. Eliminating the deduction even with lower tax rates (President Obama’s corporate tax proposal) would reduce capital budgets by 20 percent.
- Threatened by Regulatory Process
Credited with helping our nation crawl out of one of the worst national economic downturns, the American oil and natural gas industry is a beacon for job creation and economic growth. Independent producers across the nation are hiring thousands, generating billions in revenue, improving the nation’s balance of trade, increasing American energy supply while reducing foreign oil imports for the first time in decades, and strengthening economic and national security.
However, the oil and natural gas industry continues to be confronted by a regulatory framework that is complex, extensive and growing. Industry detractors continue to use the regulatory process to halt American energy production through the federal agencies.
States have safely and responsibly regulated the production of oil and natural gas for the past century. Now, the Obama Administration is looking to federalize the regulation of oil and natural gas development under laws never been used before – creating duplicative and costly burdens that will be detrimental to America’s independent producers. Twelve federal agencies are currently taking aim at American oil and gas production. Such actions would slow down production and result in a loss of jobs, loss of revenue, decreased American energy supply, increased reliance on foreign imports, and a weakened economy and national security.
We Need Your Help – Get Involved
Instead of politicizing energy, we must energize the political process! We must keep American energy at the forefront of the debate. As Congress prepares to act on issues of critical importance to our industry, you can get involved by helping to educate members of Congress on both sides of the aisle about issues affecting independent oil and gas producers and by responding to action alert requests and attending town hall meetings in your member’s district back home.