POLICY
Biden’s Build Back Better Bill Would Destroy Jobs, Harm the Energy Industry By: Jason Modglin, President of the Texas Alliance of Energy Producers
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he most consequential legislation affecting domestic production of oil and natural gas is currently being debated in the United States Congress: the budget reconciliation package, also known as the Build Back Better Act. Among a backdrop of higher gasoline prices, a global energy crisis and projections for higher home heating costs from natural gas, propane and heating oil this winter, Congress is considering measures to dramatically increase the costs of energy. This threatens not only the domestic energy industry but also the plethora of benefits derived from their product which has lowered U.S. and global emissions, restored manufacturing back to the U.S. by providing affordable, abundant energy, and led a technological revolution that has secured enough energy for the coming decades of demand. Here, the Texas Alliance of Energy Producers has planted our flag advocating for our members and the families, jobs and land that provide the fuel and petrochemicals for modern life. For the past six months, we have worked actively with the Independent Petroleum Association of America (IPAA), the American Exploration & Production Council (AXPC), the Domestic Energy Producers Alliance (DEPA), and the National Stripper Well Association (NSWA), and Congressional leaders on both sides of the aisle to educate and inform on these proposals. Below we detail major fights on the elimination of standard business tax deductions like Intangible Drilling Costs (IDCs) and Percentage Depletion, some of the progress made and setbacks like the imposition of a new tax on methane emissions the outcomes which have not been determined. The ultimate fate of these proposals is still very much an open question, though new deadlines put final action by the Congress no later than
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SHALE MAGAZINE NOV/DEC 2021
Thanksgiving 2021. Lawmakers need to hear from you on how these provisions will harm you and your customers. President Biden called on Congress to pass his Build Back Better agenda that started at a whopping $3.5 trillion. In hopes of pushing this bill through without Republican support, Democratic authors are pursuing the budget reconciliation process that allows them to pass legislation with a simple Senate majority. Congressional offices and advocates say, if passed, this bill will be a legacy achievement for Speaker Nancy Pelosi as she ends a 34year career in the U.S. House of Representatives. Beyond the matters affecting energy, the bill is a Democratic party wish list ranging from expanding Medicaid and new entitlements, housing, education and climate change, now totaling some $1.75 trillion after extensive opposition from moderate Democratic Senators Joe Manchin and Kyrsten Sinema. This makes the 2009 American Recovery and Reinvestment Act look rather small at $831 billion. The nonpartisan Tax Foundation “estimate(s) that the House bill would reduce long-run economic output by nearly 0.4% and eliminate about 107,000 full-time equivalent jobs in the United States. It would also reduce average after-tax incomes for the top 80% of taxpayers over the long run.”1 Because it is so broad, oil and gas advocates have focused on the industry-specific provisions, but it should be noted this bill raises taxes on all businesses, slows economic growth and initially proposed the disastrous Clean Electricity Performance Plan (CEPP) designed to make electricity more expensive and less reliable. When the proposal was first advanced in the spring, starting in the Senate, the bill included numerous tax provisions that would devastate domestic production of oil and gas, including the elimination of stan-
dard business tax deductions like IDCs and Percentage Depletion. Alliance Petroleum Economist Karr Ingham constructed an analysis in terms of negative employment impacts in Texas that would occur because of eliminating IDCs and Percentage Depletion. That analysis found a direct loss of 97,750 Texas jobs to
