A “Methane Fee” Puts America’s Progress in Jeopardy

By: Anne Bradbury, AXPC CEO

In the next few weeks, Congressional Democrats will try to push a massive $3.5 trillion budget reconciliation bill that includes numerous tax increases on the American people and puts our environmental progress in jeopardy.

The bill is likely to include a ‘methane fee,’ that is targeted at America’s oil and natural gas workers but amounts to a production tax on the industry that would hurt supply of natural gas and could cost the American people over $9 billion and about 90,000 jobs across the country.  This is the epitome of policy being used for political grandstanding – but this policy is truly bad for American families, bad for American jobs, and bad for cleaner energy progress.

In the past decade, the US oil and natural gas industry has transformed our country from energy dependence to energy abundance. In addition to supporting our national security and lowering power costs, the use of natural gas has led to significant reductions of greenhouse gas (GHG) emissions and positioned the US as a climate leader.  According to the Center for Climate and Energy Solutions, natural gas has been the primary factor in reducing US electric-power sector CO2 emissions to 32-year lows – a number that is projected to continue to decline. Increasing the cost of natural gas with a methane fee could lead to another switch in electric power generation – not from natural gas to renewables, but from natural gas back to coal.

Moreover, we have the opportunity to build on this success globally by exporting US liquefied natural gas (LNG) to countries around the world, as less energy rich countries are looking to natural gas to support their climate efforts and provide reliable, affordable energy to their citizens.  However, imposing a punitive tax on American producers will make US LNG less competitive in the global market, to the detriment of efforts to lower global emissions.

The oil and natural gas producers who make up AXPC are investing millions in the development and deployment of technologies to constantly improve our ability to detect and mitigate emissions.  Technology in this space is rapidly evolving, and holds great promise for long-term, cost-effective emissions reductions, both domestically and globally. A new tax could reduce the available capital for these game-changing technologies.

It’s also important to remember that methane emissions from our industry are already regulated at the federal and state level and we support common-sense methane regulation.  Our companies believe collaboration amongst policymakers and industry partners is needed to find solutions that will continue to meaningfully drive down emissions, while allowing US independent producers to meet the global demand for affordable and reliable oil and natural gas.

As Members of Congress try to push through this mammoth reconciliation bill, they should remember that the consequences of punitive taxes on American businesses will reach every American.

As American families fill their cars with gas, pay their monthly electric bill, book a family vacation, or purchase groceries, the increased costs caused by punitive tax policies will be impossible to ignore.  The states that depend on oil and natural gas production will have less money in their budgets for vital services like education, healthcare, road repair, and first responders.  The communities in which oil and natural gas employees live and work will have empty restaurants and hotel rooms, and less retail spending.

And, the jobs lost due to the higher cost of natural gas are not just those in our industry. Natural Gas is the largest fueler of our electricity generation system. Higher priced gas means higher priced electricity and industrial fuels.  That means less competitive US manufacturing, which impacts millions of American workers and customers.  This would be bad in any economy – but especially one currently experiencing high inflation rates.

Our industry is committed to environmental protection and continuous improvements. But the punitive tax on oil and gas producers will only harm our economic strength and our environmental progress.  This policy should be left on the cutting room floor as Congress debates the reconciliation process.

About the American Exploration and Production Council:
AXPC is a national trade association representing the largest independent oil and natural gas exploration and production companies in the United States. We lead the world in the cleanest and safest onshore production of oil and gas, while supporting millions of Americans in high-paying jobs and investing a wealth of resources in our communities. Learn more at https://axpc.org/


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