Transcript: BP President Lamar McKay’s testimony on Big Oil tax breaks
“The reality is that even with major improvements in efficiency and the rapid growth of biofuels, wind, and solar, that 20 years from now, in 2030, the United States will still depend on oil, natural gas, and coal to meet more than three quarters of its energy needs.”
“On the supply side, we support properly scaled transitional incentives for alternative energy.”
“But raising taxes on one form of energy to encourage production of another will reduce industry’s ability to keep with up growing U.S. energy demand.”
“The result could be less investment, less production, tighter energy markets, and over time potentially higher prices for consumers.”
Full Transcript of the May 14th Testimony:
Chairman & President
Thank you, Mr. Chairman, ranking member Hatch, members of the committee, good morning.
My name is Lamar McKay, and I’m the chairman and president of BP America. I appreciate the opportunity to address the issue of energy tax incentives today.
Before doing so, I want to recognize that last month marked the one year since the Deepwater Horizon accident, and BP continues to work very hard to meet our commitments in the Gulf.
Now, I’d like to provide just a little context on BP’s operations and investments in the U.S., both in traditional and renewable energy.
BP has a very long history in the United States, over 100 years with 23,000 U.S. employees and operations spread across the country. We are committed to providing the U.S. with the energy it needs to grow in the coming decades and doing so in a responsible and sustainable manner. We’re one of the largest oil and natural gas producers in the U.S., and one of the nation’s largest energy investors.
Now over the five years ending in 2009, we have invested more than $37 billion in development of U.S. energy supply. We continue to invest in natural gas production from the Rocky Mountain West and our existing shale gas regions. We have significant oil production in Alaska and the Gulf of Mexico. Further, we have made and are continuing to make significant investments in our refineries in the U.S., including major capital projects that will increase gasoline production capacity at our key mid-western refineries.
We also invest actively in renewable energy. During 2009, we invested nearly $1 billion or 10% of our $9.9 billion of U.S. capital budget in alternative energy. These investments include the operation of wind farms in 10 states, development of the first commercial scale cellulosic biofuel facility in Florida, and work on advanced biofuels molecules biobutanol with DuPont, and we have our solar business which has been in operation for over 35 years.
BP supports a comprehensive energy policy that includes all forms of energy including oil, natural gas, coal, nuclear, biofuels, wind, and solar, and encourages efficiencies and conservation. The reality is that even with major improvements in efficiency and the rapid growth of biofuels, wind, and solar, that 20 years from now, in 2030, the United States will still depend on oil, natural gas, and coal to meet more than three quarters of its energy needs.
On the supply side, we support properly scaled transitional incentives for alternative energy. But raising taxes on one form of energy to encourage production of another will reduce industry’s ability to keep with up growing U.S. energy demand. The result could be less investment, less production, tighter energy markets, and over time potentially higher prices for consumers.
Instead, our nation should be encouraging production of all forms of energy, including oil and natural gas. On the demand side, energy policy should encourage conservation and help drive energy efficiency.
The energy challenges facing the U.S. are enormous. The impacts of high energy prices on the overall economy and the American people are very real. We cannot change the international crude oil market, which drives those prices in which the country relies for more than 60% of the oil it consumes. But we can work with the Congress, with the administration, and with consumers across the nation to move towards greater energy security and a lower carbon energy future.
Congress establishes the rules regarding energy and tax policy. Companies take those rules into account in making their investment decisions. Because of the long-term nature of these significant capital investments that are required to develop and produce energy, a stable and competitive tax framework is critical to the United States remaining attractive in the global demand for capital investment.
The currently contemplated changes to the tax rules would limit the resources companies like BP have to invest, not only in conventional energy production but also in new emerging technologies like wind, biofuels, and solar. BP is very serious about bringing new sources of oil and natural gas to the market. We’re also serious about building a sustainable, profitable alternative energy business capable of delivering clean affordable power. And my company stands ready to work with you and others to address the energy and environmental needs of this nation. Thank you.