by Matt Letourneau

In June, the Institute for 21st Century Energy issued a report outlining the reasons why the Obama Administration's efforts to levy new taxes and fees on the oil and gas industry is a bad idea.

Judging from the testimony of the Treasury Department's top economist in front of a Senate Finance subcommittee yesterday, the Administration apparently didn't read our report.

Dow Jones Newswire reports:

"The Obama administration opened a new front in its effort to impose $31.5 billion in taxes on oil and gas companies, saying that the nation puts too much emphasis on oil and gas at the expense of other industries.

"To the extent that current subsidies for the oil and gas industry encourage the overproduction of oil and natural gas, they divert resources from other, potentially more efficient investments, and they are inconsistent with the Obama administration's goals to reduce greenhouse-gas emissions and build a new, clean energy economy," Alan Krueger, the Treasury's chief economist, told the panel."

Considering that America currently imports over 60 percent of our oil, it's difficult to understand how "current subsidies" are encouraging "overproduction." And why exactly is clean-burning natural gas "inconsistent with the Obama administration's goals to reduce greenhouse-gas emissions and build a new, clean energy economy?"

Of course, claiming that the oil and gas industry is receiving "subsidies" at all is misleading, since the oil and gas industry pays taxes based on the same tax code rules as any other American business.

The Institute's report outlines the many reasons why singling out the oil and gas industries is bad for America, including increasing our reliance on foreign oil, harming U.S. economic competitiveness, and jeopardizing jobs while increasing costs to consumers.

Of particular concern is the fact that national oil companies (NOCs) will gain a competitive advantage over U.S. companies if oil and gas taxes are raised. Already, 17 of the top 25 oil and gas producing companies are national companies, the largest of which are based in the Middle East, Russia, China and Venezuela. NOCs currently account for 51% of world oil and gas production.

Instead of raising oil and gas taxes, the Institute recommends making public areas that are not legally prohibited available for lease and exploration, which could create as many as 160,000 new jobs, increase government revenues by as much as $1.7 trillion and offset nearly 20% of imported oil.

In addition, the Institute recommends changes to the tax code such as reducing the recovery period for investment in electricity transmission lines, reducing the cost-recovery period for the installation of best available energy efficiency devices, and providing for immediate expensing for investments that meet the standard for new breakthrough low carbon technologies.

The Institute also calls for policies that encourage greater use of natural gas, and increasing and making permanent the research and development tax credit.

Since the Administration seems intent on taxing us back to energy insecurity again, it will be up to Congress to reject this approach and pursue a path that will instead increase our energy security.