Sheila McNulty writes from Houston:
The small companies that drive the bulk of US natural gas production are going to Washington DC next week to lobby against tax increases for the oil and gas industry proposed by the Obama Administration.
These companies say the increases – created by the planned withdrawal of tax benefits the industry has enjoyed for years – will target the small, domestic energy companies that produce 82 per cent of US natural gas and support hundreds of thousands of jobs.
In attempting to limit the billion dollar profits of the ExxonMobils and Chevrons of this world, the Obama administration is placing burdens on the small production companies already being squeezed by plunging commodity prices, the credit squeeze and the drop in demand from the economic downturn.
Indeed, the measures will likely continue the trend of small companies, already on the edge, filing for bankruptcy protection from creditors. And that, in the end, would mean less competition for Exxon and Chevron and an opportunity to pick up oil and gas assets at distressed prices. Perhaps the Obama administration needs to think of a better way to hit its targets.