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API Chief Economist Admits Taxes On Oil Industry Can Create Millions Of Jobs

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"API Chief Economist Admits Taxes On Oil Industry Can Create Millions Of Jobs"

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John Felmy
John Felmy

The American Petroleum Institute (API) — the lobbying giant of the oil and gas industry that also writes its own rules — is continuing its work to keep oil industry profits high as the American worker suffers. API demonizes any efforts to cut the industry’s billion-dollar subsidies as “energy taxes” that “destroy jobs.” In fact, API chief economist John Felmy has claimed a report commissioned by the Center for American Progress finds that “$1 billion increase in oil and natural gas industry taxes destroys 5,000 jobs,” quoted in an API blog post:

Citing a study conducted by the Center for American Progress (CAP), API Chief Economist Dr. John Felmy said every $1 billion increase in oil and natural gas industry taxes destroys 5,000 jobs. The administration’s 2011 proposed budget includes tax hikes of $80 billion on the industry, which translates into a loss of 400,000 jobs throughout the U.S. economy.

Noting this unusual claim, the Wonk Room reached Dr. Felmy for a telephone interview. Contrary to API’s portrayal, “Green Recovery,” the 2008 report prepared by the Political Economy Research Institute at the University of Massachusetts, did not actually model taxes, but compared levels of investment into the oil and gas industry versus clean industry (renewables and efficiency). The analysis found that a ten-year $100 billion shift in capital from polluting energy to clean energy would create two million new jobs with a loss of only 500,000 jobs in the oil and gas sector. Using Felmy’s logic, the Center for American Progress report found that a $1 billion increase in oil and natural gas taxes creates 15,000 jobs. The administration’s 2011 proposed budget includes tax hikes of $80 billion on the industry, which translates into an increase of 1,200,000 jobs throughout the U.S. economy.

In his interview with the Wonk Room, Felmy recognized that the report concluded that you would get four times as many clean energy jobs as oil jobs from the same investment, because “green technology is more labor-intensive and less capital-intensive.” He admitted that if you invest money in clean energy instead of oil and gas:

I have no doubts you can get a lot more jobs.”

In other words, tax hikes improve the economy.

Felmy dismissed this potential engine of massive economic recovery by arguing that the green jobs that would be created are “low-paying, low-wage jobs,” citing the report’s finding the green jobs would have a 20% lower average wage. However, Felmy evidently failed to read the report’s very next sentence: “But this number is deceptive because a green investment program will create roughly triple the number of good jobs — paying at least $16 dollars an hour — as the same level of spending within the oil industry.” Clean energy investment can revitalize every sector of the economy, from entry-level positions to advanced manufacturing.

When the Wonk Room attempted to raise the question of global warming pollution, he said emphatically and repeatedly that it is API policy to not discuss the science of global warming:

“We do not talk about the science.”

“It’s almost impossible,” he said, to reduce global warming emissions. “Focus on coal and support us,” he argued. When the Wonk Room noted that the Department of Energy found that the Waxman-Markey legislation would have had a marginal effect on petroleum prices in the short term because investors would focus on high-polluting coal first, he responded:

“That’s just silly.”

Unfortunately, the oil and gas industry’s deliberate, decades-long campaign to distort climate science and make society pay for its pollution-based profits is not “silly” at all. Even as its public documents elliptically recognize that “the potential climate impacts of energy use” are “an important environmental challenge,” the American Petroleum Institute has funded global warming denial for decades, with the goal of “victory” by making “uncertainties in climate science” into “conventional wisdom.”

Ironically, American oil companies would likely benefit dramatically from President Obama’s clean energy agenda. They have the capital, the manufacturing capacity, and the engineering wherewithal to dominate the clean energy economy, especially in areas like deep geothermal power, offshore wind and tidal power, and carbon sequestration. They even have the bridge fuel of comparatively low-carbon natural gas to bridge the transition from traditional coal-fired electricity to fully renewable energy. But mastering the green economy of the future would require new business models for a stagnant industry frightened of change. Instead the American Petroleum Institute continues to demonize the path to green economic recovery as job-killing taxes, as the United States falls into disrepair and the world burns.

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