Chris Prandoni

Why Obama Rejected the Keystone Pipeline

Posted by Chris Prandoni on Thursday, January 19th, 2012, 10:49 AM PERMALINK

Originally published by The Daily Caller.

President Obama has reportedly decided to reject the Keystone XL Pipeline and the 20,000 jobs, increased energy security and billions in economic activity that are tethered to it.

The payroll tax extension bill that Congress passed in December gave Obama 60 days to determine whether the pipeline is in the country’s national interest. It is, but Obama has decided to kill the project anyway — for political reasons. Basically, Obama doesn’t want to alienate his environmentalist supporters, who have worked themselves into a frenzy over the innocuous pipeline. Instead, he’s selling out the union members who would have built it and the consumers who would have benefited from its construction.

Politically, unions have nowhere to go. With public sector workers constituting a majority of U.S. union members, the unions need high levels of government spending (and large numbers of government jobs) in order to remain viable over the long haul. In practical terms, that means they need to support the Democratic Party. During the 2008 election cycle, unions gave 92% of their members’ dues to Obama. Obama knows union money will continue to flow into his war chest even if he kills some union jobs by scuttling the pipeline.

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The NLRB's Gift to Big Labor

Posted by Chris Prandoni on Thursday, December 22nd, 2011, 12:59 PM PERMALINK

Despite a referendum from House Republicans, the National Labor Relations Board is moving forward with its Ambush Election rule. The NLRB finalized the rule yesterday, making cosmetic changes to the original proposed rule. Unsurprisingly, the Ambush Election rule still silences workers and burdens employers.

Here’s what DC’s labor experts are saying about the rule: 

“With the unemployment above 8 percent for almost three years, the NLRB Final Election Rule is another slap in the face at out-of-work Americans.  The rule, which reduces the time before elections for union representation and prevents employers from presenting the facts to their workforce, will raise the costs of employment for American firms and discourage employers from hiring.
In addition to this new rule, American employers will be subject to new penalties in 2014 for hiring more than 49 workers under the new health care law. Employers are subjected to  NLRB action if they expand, as did Boeing, to a new location within the United States. Federal contractors are facing affirmative action for veterans, women, and minorities.  It is becoming increasingly clear that the only cost saving move for many employers is to reduce hiring or move offshore.” Diana Furchtgott-Roth, Senior Fellow at the Manhattan Institute and former Chief Economist at the Department of Labor.

“What the Board has done is an intrusion on employee rights to insure free and informed choice.  This is an insult to our democracy.”  John Raudabaugh, former NLRB Member

The Chamber of Commerce and Coalition for a Democratic Workplace are fighting back against the Ambush Election rule and have sued the NLRB. From the Chamber’s press release:

“It is tragic that the Board would expend its resources in this manner, creating more confusion and uncertainty under our nation’s labor laws, aiding only unions and perhaps lawyers, rather than focusing on some type of initiative that would encourage job growth,” said Johnson. “Given that 95% of all elections are now conducted within two months, and unions win more than 67% of those elections, there is clearly no rational justification for this regulation. Unfortunately, this new rulemaking is just one aspect of a set of initiatives pursued by the General Counsel’s office and the Board to ease unionization. I suspect we will see more of the same.”

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Obama's War On Domestic Oil Production

Posted by Chris Prandoni on Friday, December 16th, 2011, 10:18 AM PERMALINK

This post was originally published at   

This week the Department of Interior (DOI) sold its first oil lease in the Gulf of Mexico in over a year. Withholding drilling permits and cancelling leases, the Obama Administration has made what was once routine nearly impossible.

Upon assuming office, President Obama cancelled 31 oil and gas lease sales, delaying thousands of jobs and billions in economic activity. Not letting any crisis go to waste, the Department of Interior imposed a six month drilling moratorium on the Gulf following the Macondo disaster.

The Obama Administration’s recent offshore drilling plan codifies the White House’s anti-energy, anti-jobs position. The Obama 2012-2017 draft drilling plan closes a majority of the Outer Continental Shelf (OCS) to new energy production. In fact, less than 3 percent of America’s OCS will be available for development. 

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Senators Collins and McCaskill Jobs Bill Misses the Mark

Posted by Chris Prandoni on Wednesday, December 7th, 2011, 9:31 AM PERMALINK

[PDF Document]

The Collins-McCaskill jobs bill contains some good initiatives (boiler MACT delay, consolidation of federal workforce) but undermines its intended purpose by raising taxes on some of America’s largest employers—American oil and natural gas producers.

Impact on Maine
Maine has no natural gas or oil reserves within its borders, making Maine’s citizens completely dependent on the lower 48 for their heating and driving needs. An absence of fossil fuels is especially concerning for Mainers since 80% of the state’s households are heated with fuel oil.

More taxes, less jobs
Oil and natural gas producers are responsible for about 9.2 million jobs in this country and about 7.5 percent of its GDP. Raising taxes on this industry would force companies to delay or scrap future projects as it becomes significantly harder for them to recover their investment costs. Most importantly, none of the tax policies employed by oil and natural gas companies are particularly unique—most are used by many businesses in many industries. Singling out one industry for tax increases is bad tax policy and inequitable.   

Repealing the below deductions and credit could kill 170,000 American jobs and ultimately reduce government revenue, according to a Wood-Mackenzie study.

1. Intangible Drilling Costs.  Current law allows energy companies to deduct most (only 70% of these costs for the larger companies) of the costs associated with drilling.  All expenses should be deductible in the year they are incurred.  The Collins-McCaskill bill would repeal this and make companies deduct the costs very slowly over fifteen years.

2. Percentage Depletion.  This refers to a provision of law that allows taxpayers to recover their lease investment in a mineral interest through a percentage of gross income from a well. The Collins-McCaskill bill would repeal this provision ONLY for investments in oil and gas wells.  Interestingly, the largest oil companies don’t benefit from this today, so this tax increase is targeted only at smaller energy companies and their investors.

3. Manufacturer Tax Deduction (aka “Section 199”). All employers are today allowed to deduct up to 9% of the cost of domestic manufacturing—all employers, that is, except energy companies, who can only deduct 6% of such costs.  The Collins-McCaskill bill would deny this deduction entirely to energy companies, singling them out by picking winners and losers in the tax code.

4. Tertiary Injectants.  Current law allows energy companies to deduct the cost of injecting materials into older energy reservoirs in order to keep them productive.  This is the proper tax treatment of this cost.  The Collins-McCaskill bill would replace this very ordinary deduction with precisely nothing.  Energy companies would simply have to eat the cost with after-tax dollars.

5. Dual Capacity Rules. The U.S. is one of the only nations which attempts to tax on a “worldwide” basis—even on income which has already faced income taxation in other countries.  When combined with the highest corporate tax rate in the developed world, “worldwide” taxation is an uncompetitive jobs killer.  In order to avoid international double taxation, employers can claim a tax credit for income taxes paid overseas.  The Collins-McCaskill bill makes it more difficult for energy companies to claim this tax credit, exposing their worldwide income to international double taxation—potentially shipping jobs overseas to avoid paying taxes twice.

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Conservatives Should Oppose NAT Gas Act

Posted by Chris Prandoni on Tuesday, November 29th, 2011, 2:51 PM PERMALINK

This article was originally printed by the Washington Times.

Flooded with grant money, compelled by mandates and burdened by regulations, America’s energy sector is a convoluted mess. Government intervention has turned this market upside down. Now, Republicans and Democrats are eyeing the NAT GAS Act - legislation that would further muddy the water.

The New Alternative Transportation to Give Americans Solutions Act, or “NAT GAS Act,” would allow consumers purchasing natural gas vehicles or investors developing natural gas refueling stations to claim between $5 billion and $9 billion in federal tax credits over the next five years. Rep. John Sullivan, Oklahoma Republican, introduced the bill in the House, and Sen. Harry Reid, Nevada Democrat, and Sen. Robert Menendez, New Jersey Democrat, are championing the bill in the Senate.

When the NAT GAS Act was introduced in the House, a substantial number of Republicans threw their weight behind it out of an inherent tendency to support natural gas and a bit of group-think. Once Republicans took a step back and reflected on the broader implications of the act, they began dropping off the bill in droves - 19 Republican co-sponsors have pulled their support.

Republicans’ knee-jerk reaction to natural gas is “we need more,” and for good reason. It is cheap, abundant and efficient. The left has waged a war on America’s natural gas producers in an attempt to inhibit production at every turn. Decrying hydraulic fracturing, the politicized Environmental Protection Agency and congressional Democrats are attempting to regulate the 60-year-old practice out of existence. State legislatures are looking to tax natural gas extraction, thereby limiting economic growth and potential job creation.

Unfortunately, the NAT GAS Act does nothing to facilitate natural gas production or alleviate many supply-side concerns conservatives have. This explains why so many House Democrats have co-sponsored the House bill and why Mr. Reid introduced the legislation in the Senate. Instead, the NAT GAS Act gives certain natural gas consumers an advantage over other natural gas consumers - effectively skewing the market, inflating natural gas consumption and potentially driving up the cost of natural gas.

Furthermore, there is no market failure in need of correction. UPS and other shipping companies already have substantial natural gas fleets without the NAT GAS Act. There is no denying that America’s energy policy is distorted and riddled with preferences. But free-market conservatives looking to remedy this problem should begin peeling away the government’s consumption mandates and tax policies, not piling on more rules. Of course, repealing existing tax credits or deductions must be done in a revenue neutral way - the last thing Republicans want to do is to help fund President Obama’s supersized government.

Rep. Mike Pompeo, Kansas Republican, has introduced the Energy Freedom and Economic Prosperity Act - modeled after President Reagan’s 1986 tax reform - which repeals a handful of energy tax credits and lowers the corporate tax rate by an equivalent amount. Conservatives looking to clean up America’s energy market and tax code should follow Mr. Pompeo’s lead, not Mr. Reid‘s.

T. Boone Pickens and 220 businesses have thrown their weight behind this legislation and are busy lobbying Congress to pass it. Fixing the tax code and restoring market forces to our energy sector is an uphill battle for Republicans, but one that should begin with opposition to the NAT GAS Act. 

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NLRB Suppresses Dissent to Ram Through Controversial Rule

Posted by Chris Prandoni on Tuesday, November 29th, 2011, 11:51 AM PERMALINK

It is becoming increasingly clear that the Obama administration, NLRB, AFL-CIO, SEIU all have the same goal in mind: increasing union membership by any means necessary

NLRB officials have been relentless in forging new rules aimed at limiting the amount of time between when a union announces an election and when the NLRB monitored election occurs. Employers are currently afforded, on average, 31 days to educate their employees about the pros and cons of unionization. Effectively silencing an employer, the NLRB rule would allow the NLRB to hold an election only ten days after the union informs the employer of intent to unionize.

More importantly, this will give workers an insufficient amount of time to consider joining a union. When workers cast their ballot, they will do so having heard one side of the story—the unions.

Unfortunately, this type of behavior is par for the course. What is surprising is how the pro-union Obama appointees disregarded the Board’s own operating rules to silence Republican Member Hayes and silence public opinion.

In a letter to Education and Workforce Committee Chairman Klein, Hayes wrote:

I criticized the majority’s use of a rulemaking process as opaque, exclusionary, and adversarial…That criticism apparently made no impression on my colleagues, who have continued this process in the same manner, and without my participation; and, who have now made in unequivocally clear that they intend to publish a final rule before the expiration of Member’s appointment without regard to Board tradition or rule.

This shocking abuse of the rules to advance a partisan agenda is further reason to support the Workforce Democracy and Fairness Act, which overturns the NLRB expedited ambush election rule.

Click here to urge your Representative to support the Workforce Democracy and Fairness Act!

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Stop Regulatory "Card Check"

Posted by Chris Prandoni on Tuesday, November 29th, 2011, 10:00 AM PERMALINK

With union membership falling, the National Labor Relations Board has bent over backwards to corral workers into unions. Obama’s appointees are rewriting election rules and upending long held understandings about what constitutes a union.

Pushing back against this rogue agency, House Republicans have introduced the Workforce Democracy and Fairness Act.

Tell your Representative to support the Workforce Democracy and Fairness Act.

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Obama Caves to Insatiable Wing of Party, Delays Keystone Pipeline

Posted by Chris Prandoni on Thursday, November 10th, 2011, 3:23 PM PERMALINK

Over the past six months, the Keystone XL Pipeline’s prospects have oscillated between probable and unlikely. The current rumors surrounding this project suggest that Obama is going to bow to the insatiable wing of his Party, the Greens, and delay the Keystone pipeline until after the 2012 election.

This is a huge mistake.

TransCanada has said they will scrap the desperately needed construction project if it is delayed another year—the pipeline has already been pending for three years. With unemployment lingering around nine percent, the country can ill afford to scuttle this economic stimulus.

Drawing an arbitrary line in the sand, environmentalists threatened to Al Gore (support a third party candidate or sit out the election) Obama if he doesn’t kill this project. Bucking the facts and the American public, preliminary reports suggest that Obama has caved to pressure from the far Left.    

The three false claims environmentalists are making about the Keystone Pipeline are easily refuted.

Claim 1: Building the pipeline will increase global emissions and harm the environment. The State Department has said that constructing the Keystone pipeline will result in “no significant impacts to most resources along the proposed Project corridor.” Furthermore, it is now possible that TransCanada will simply build a different pipeline to the Canadian coast and ship the crude Alberta oil to be refined in China. Whether or not Obama allows this pipeline to be built, the Canadian oil will be extracted, transported, and used.

Claim 2: The pipeline endangers the public. America is literally covered in pipelines. The easiest way to transport the enormous amount of oil needed to power our economy is through an infrastructure of pipelines. Trucks and boats, while utilized, cannot carry nearly as much oil or gasoline and are also susceptible to accidents. Until America has moved to a fully electric fleet (don’t hold your breath), pipelines are here to stay.

Claim 3: Keystone codifies the U.S. “addiction to oil.” Killing the Keystone Pipeline will do nothing to supplant the amount of oil Americans consume. EIA has predicted that U.S. daily consumption will increase to 21.9 million barrels of liquid fuels (nearly all of which are oil based) by 2035, a rise from about 19 million barrels per day in 2009. With the Keystone Pipeline now gone, the U.S. will have to import more foreign oil.  

Here are all the economic gains Obama is needlessly jeopardizing.

Once again, this President has put his re-election ahead of the country.

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When Oil Companies Make Billions, Who Profits?

Posted by Chris Prandoni on Tuesday, November 8th, 2011, 2:29 PM PERMALINK

Not cheering yet? You should be. In all likelihood, you are Big Oil.

Nearly half the population holds stock in oil and natural gas companies through pension funds—there are 145 million retirement accounts invested in oil and natural gas companies. The average value of these pension accounts is less than $55,000. 48.6 million American families hold IRAs that are invested in oil and natural gas companies—80 percent of these IRA holders earn $70,000 or less. All in all, corporate management owns 2.8 percent of oil companies; middle class Americans largely own the rest.

But Americans looking to retire comfortably aren’t the only ones pulling for oil and natural gas companies—so are the millions employed by the industry. Each well an oil and natural gas producer drills costs millions, sometimes billions of dollars. This money is spent purchasing drill bits from Wisconsin, steel from Pennsylvania, computers from California, and assets from every other state. Paying their workers a premium of $96,844, more than twice the national average, oil and natural gas companies ensure their employees are well compensated.

The pending Keystone Pipeline XL—an oil pipeline that would deliver crude oil from Canada to refiners in Oklahoma and Texas—is a great case study. Providing an immediate boon to the struggling Midwest, the project is slated to cost about $12 billion dollars and would create 13,000 construction jobs. Just as important is the ripple effect the Keystone pipeline would have on the larger American economy. The Keystone pipeline would create over 340,000 additional U.S. jobs between 2011 and 2015 in related manufacturing and service industries.

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A Look Behind The Oil And Natural Gas Industry's Numbers

Posted by Chris Prandoni on Thursday, October 27th, 2011, 3:57 PM PERMALINK

Four times a year, Democrats and the Left cherry-pick oil and natural gas companies’ quarterly earnings and supplementary data in an attempt to justify tax increases on some of America’s largest employers. Yes, Exxon and other American oil and natural gas companies make a lot of money, but they also pay a lot of taxes and employ a lot of people—two facets of these companies that are rarely, if ever, discussed.    

You are “Big Oil”
Today Exxon announced 3rd quarter profits of $10 billion. So when oil natural gas companies make billions, who profits? If you have a retirement fund or are invested in the stock market, chances are you own a share of an American oil company—18 percent of oil and natural gas companies are owned by IRAs, 31 percent by pension funds, 20 percent by asset management companies (mutual fund, etc), 21 percent by individual investors, 6.6 percent by other institutional investors. Corporate management owns less than 3 percent of all oil natural gas companies. 

Oil and natural gas companies pay a lot of taxes
Exxon’s global effective income tax rate is a whopping 44 percent. This is due to the fact that many foreign governments charge a high royalty tax on oil production. Over the past five years, Exxon has paid $171 billion in global income taxes.

Domestically, Exxon’s effective income tax rate over the past five years is 32 percent. Over the same period, Exxon paid $21 billion in income taxes. But that’s not all, Exxon still pays the government royalty or lease payments, property taxes, excise and sales taxes on gasoline. When summed, the total tax expenses for Exxon and other oil and natural gas companies reaches the point of absurdity.

Paying nearly $100 million a day in income taxes, the oil and natural gas industry’s tax expenses average 48 percent, compared to 28 percent for other S&P Industrial companies. Using any tax metric, oil and natural gas companies are forking over lots of cash to the government.

And create a lot of jobs
Supporting more than 9 million well-paying jobs, America’s oil and natural gas industry is one of the few growing areas of our economy and responsible for 7.5 percent of GDP. But oil and natural gas companies want to create even more jobs. If the Obama Administration would begin to issue permits, sell leases, and lift bans on government land, the oil industry would invest hundreds of billions in domestic production. This flood of capital would create a million jobs over the coming years and net the federal government nearly $200 billion in taxes.

Unfortunately, Democrats and the Obama Administration have consistently attempted to raise taxes on this heavily taxed industry. Raising taxes on oil and natural gas producers would force companies to delay or scrap future projects as it becomes significantly harder for them to recover their investment costs.

You don’t know what you got ‘til it’s gone
The Obama Administration’s policies have caused expensive rigs to leave the Gulf of Mexico—taking tens of thousands of jobs with them. Future policies which hamstring natural gas production and close the Trans-Alaska Pipeline System would have the same effect. With a 9 percent unemployment rate, the Obama Administration should be facilitating growth and investment—not taxing it.   

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