WTAS: ‘Methane Fee’ Would Raise Household Energy Costs

Congress is in the midst of budget reconciliation, and the $3.5 trillion proposed package is, well, a lot to unpackage.

As with any proposal of this magnitude there’s quite a bit of pork and buried gems to uncover, including “numerous items that will decimate American oil and natural gas producers,” according to the Independent Petroleum Association of America and others. These proposals hit all segments of the industry and beyond from the nation’s pipelines, utilities and consumers.

One such measure is a duplicative tax on oil and natural gas production and natural gas transmission being framed as a ‘methane fee’.

But make no mistake, a tax by any other name is still a tax – and this tax could increase U.S. consumer natural gas bills by 17 percent on average or more than $100 per year for an average American family, according to one estimate in a letter to House and Senate leadership signed by IPAA, the American Gas Association, the Interstate Natural Gas Association of America and several other state and natural gas supply chain trade associations.

As IPAA and the American Petroleum Institute, along with nearly 130 other energy, manufacturing, and business associations explained in a separate letter to Sens. Thomas Carper (D-DE) and Shelley Moore Capito (R-WV) for the Environment and Public Works Committee:

“The potential direct cost of the bill to the economy, not including import fees, could initially be as high as $14.4 billion, increasing 5 percent above inflation annually. As many as 155,000 jobs could be impacted by the tax, with the largest impacts concentrated in the health care and social assistance industries.”

For more information on the proposed national energy tax, check out IPAA’s fact sheet here.

What They Are Saying: Methane Tax

Sen. Kevin Cramer (R-ND), letter:

“One of the most concerning aspects of your proposal is its attack on U.S. energy… I am particularly concerned with the proposed fee on methane emissions from oil and natural gas facilities.

“Given the magnitude of the fee, natural gas utilities will likely seek cost recovery from rate regulators which then results in increased costs for consumers at every income level. Households, including those the President promised wouldn’t see a tax increase, will inevitably have to foot the bill.”

Marcellus Shale Coalition, Ohio Oil and Gas Association and Gas and Oil Association of West Virginia, letter:

“Such a fee is simply an unreasonable, punitive tax intended to harm the oil and natural gas industry and consumers, as well as diminish the tremendous economic and environmental benefits derived from the hundreds of thousands of women and men who work directly and indirectly for the industry in the Appalachian basin.”

Dan Naatz, IPAA, to media:

“Independent producers across the country are really concerned that the action will decimate American oil and natural gas producers. When you talk about taking away intangible drilling costs, percentage depletion and add in a lot of other fees and costs, it really would have a negative effect on the ability of our members both to operate onshore, offshore, on federal land, on private land.”

Mike Somers, API, to media:

“The methane fee proposal that we have seen is actually just a tax on American energy production. It is not a tax on emissions.

“We think that this is a misguided and punitive tax on natural gas. And it’s not only duplicative on top of federal regulation, but we think it will also harm our economic recovery by increasing energy costs on Americans.”

American Gas Association to media:

“Now more than ever, Americans need affordable energy as one-third of U.S. households face a challenge in meeting their energy needs. The methane tax that is included in the budget reconciliation bill would increase costs and make it harder to produce the reliable energy that millions of Americans use every day.”

Edward Cross, Kansas Independent Oil and Gas Association, in the Kansas Star Telegram:

“The Biden administration announced that it will be revising and expanding federal regulation of methane emissions. States are actively implementing their own regulations. And yet, now, Congress is considering an inappropriate and unworkable methane emissions tax.

“The Methane Emissions Reduction Act is unnecessary in light of the regulations in place and anticipated. The fee would be difficult to implement, duplicative, punitive and costly.

“This tax is inequitable, unworkable and the wrong path to manage methane.”

Charlie Burd, Go-WV, press release:

“This harmful energy tax legislation would raise costs for all Americans, discourage capital investment that incentivizes innovation, and provide virtually no environment benefit.

“We are proud of the advancements our industry has made in air quality and environmental stewardship, including reducing methane and overall greenhouse gas emissions all while increasing production and overall usage of natural gas. That said, this massive energy tax would place a harmful burden on American families and businesses, especially our manufacturing sector.”

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