API mounts new campaign against oil industry taxes (video)

The oil and gas industry’s biggest trade group is launching a new ad campaign aimed at dissuading lawmakers from cutting tax incentives cherished by the sector.

The TV commercials by the American Petroleum Institute will air in the nation’s capital as lawmakers inch closer to a broad debate over remaking the nation’s tax code and as the Obama administration readies a federal budget proposal expected to once again target industry tax breaks for elimination. Sen. Robert Menendez, D-N.J., just reintroduced legislation that would block the nation’s largest oil companies from claiming a suite of tax deductions.

“We decided to run the ads to remind Congress that at a time when many families have had to scramble to balance their budgets, asking them to pay more for the energy they need to live their lives is bad policy and, frankly, bad politics,” said Marty Durbin, API’s executive vice president.

The two new commercials show a diverse array of men and women opining on what higher oil and gas industry taxes would mean to them.

Gone — for now, anyway — is the “lady in black” featured in so many API ads. In her place is what the trade group is billing as “unscripted,” man-on-the-street style interviews with real people:

  • “A tax on energy is a tax on everything,” one woman proclaims, from her kitchen table perch.
  • “We’re the ones who are going to pay,” predicts a woman on the street.
  • “It’s going to kill jobs,” asserts a speaker in an apparent coffeehouse. “Washington says that they’re billing the companies, but they’re really billing me.”

Ultimately, Durbin said, the message is that “higher taxes are going to end up resulting in higher costs to the industry, and that is going to have an impact on our ability to continue creating jobs,” while also hiking costs for consumers.

API isn’t the only group joining the fray. The National Taxpayers Union on Wednesday launched a separate radio and print advertising campaign that also argues against raising taxes on the oil and gas industry.

One NTU print ad warns that “singling out America’s energy industry (won’t) solve the budget crisis” and highlights the section 199 domestic manufacturing deduction, which applies broadly to American businesses, even though recent proposals aim to repeal it just for oil companies.

National Taxpayers Union Executive Vice President Pete Sepp criticized “punitive tax increases on politically convenient targets like the energy industry.”

“Pursuing stale old plans for discriminatory tax hikes on oil and gas would be a big step backward for many kinds of fiscal reforms, which is why NTU is speaking out so early and emphatically,” Sepp said.

Durbin also warned against any tax push focused solely on the oil and gas industry. That would be punitive and unfair, he insisted. And he repeated a common industry refrain in defense of its incentives: that the deductions the industry relies on have counterparts in other areas of the tax code.

For instance, a deduction of intangible drilling costs (like hauling supplies and preparing well sites) is akin to research and development credits and other cost-recovery mechanisms, Durbin said.

Critics “target them as though we are getting special treatment,” Durbin said, “when in fact these are common tax deductions and treatment.”

API’s new campaign is being launched amid buzz for carbon taxes as a way to draw more revenue to federal coffers and combat climate change. Although many energy industry leaders and analysts say the idea is a non-starter and the Obama administration doesn’t back it, the Republican Study Committee and Americans for Tax Reform President Grover Norquist are holding a news conference on Wednesday to slam the idea.

Sen. Max Baucus, D-Mont., the head of the Senate Finance Committee, and House Ways and Means Chairman David Camp, R-Mich., are building the framework for a comprehensive rewrite of the nation’s tax code, possibly closing loopholes and removing targeted deductions in exchange for lowering the overall tax rate. Although it seems unlikely that overhaul would finish this year — and may barely get started — oil and gas industry leaders are lobbying Capitol Hill on the value of the tax incentives they use to write off drilling expenses and other costs.

View API’s new ads here: