The U.S. Congress is looking high and low to find ways to trim $1.2 trillion or more from the national debt over the next decade. This time it is in the high Arctic where they are looking. Rep. Doc Hastings, R-Wash., chairman, House Natural Resources Committee, is recommending that the 12-member Congressional super committee should consider opening up the Arctic National Wildlife Refuge (ANWR) for oil and gas drilling as one way to put a dent in the federal deficit. Of course, by the time ANWR is opened and/or producing oil, the decade will be over and the money will go to another government initiative. Hastings believes the federal government needs to increase revenue rather than taxes. Opening ANWR would make sense in creating jobs and revenues. The Deficit Reduction Committee has a deadline of Nov. 23 to approve a plan for cutting the deficit by $1.2 trillion or more in the next ten years. Without reaching a compromise – something that’s been hard to do recently -- or passing Congress, then across-the-board cuts in domestic and defense spending would begin automatically in 2013. The representative does have a point. An easy way to generate federal revenue is by increasing American energy production, which is something the industry has pointed out for years. Hastings said that ANWR could produce $150 billion to $296 billion in royalties in a decade, helping to refill the federal coffers. Although I am not sure if he was assuming production could begin almost immediately or not. Opening up ANWR probably won’t pass out of the committee, let alone get through a Democratic Senate. But, what happens if there is another major shift in the upcoming presidential and congressional elections in 2012? Will there be an even greater shift away from environmental concerns to economical issues? Paying for foreign oil continues to be a major contributor to the deficit. U.S. funds are going overseas rather than being invested in domestic industries. A growing economy will do more for deficit reduction than just about any of the schemes that the administration and Congress can devise. Hastings is hoping that U.S. motorists will be fed up with high gasoline prices and will back the proposal. Environmentalists, though, have said there isn’t enough oil in ANWR to make development worth the risk. The battle lines remain drawn. Even if ANWR isn’t opened, the same arguments could be used to allow oil and gas development in other areas such as the OCS. The industry primarily supports Hastings’ plan. It is unlikely that the national debt will win out over keeping ANWR off limits but it does show the lengths to which our politicians are willing to go to raise revenues. Of course, Congress isn’t interested in raising taxes except on the oil industry, which remains one of the largest domestic industries. Pres. Barack Obama’s jobs proposal would be offset in part by repealing oil industry tax breaks and incentives. According to the administration, eliminating the tax breaks would raise about $40 billion, which would help offset the $447 billion jobs bill. But, how many jobs would that eliminate in one of the few industries that has been adding jobs? There is something counterintuitive about that logic. API president Jack Gerard said on Sept. 12, “The administration is not just turning its back on oil and gas jobs, it is proposing more taxes on an industry doing one of the best jobs of creating them while also delivering more than $86 million a day in revenue to the government.” That figures out to about $31.4 billion a year. That argument may not carry a lot of weight in the administration or Congress when several oil companies’ profits are close to or more than that number. More often than not when it comes to creating federal revenue, the oil industry comes out on the short end of the stick.
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