NEW ORLEANS, La. - Louisiana and other states rich with offshore oil and natural gas are fighting to keep more revenues destined for federal coffers.

As new shale gas plays continue to be discovered in Louisiana, the federal government is seeking to take its slice of revenues in order to help plug its $14 trillion budget deficit.

A proposal, backed by Senator Mary Landrieu (D-LA) and Lisa Murkowski (R-AK), would allow Louisiana and other producing states to keep a 37.5 percent share of oil and gas revenues that would otherwise fall into federal coffers.

At the moment, nearly all royalties and revenues from energy production in federal waters – about $5 billion to $10 billion annually – goes to the U.S. Treasury Department.

However, according to a 2006 law, Louisiana already retains 37.5 percent of severance tax revenues, but wont see any of the money until 2017. Landrieu feels that if other states were given the same economic incentive, they may be more attracted to offshore drilling.

Federal opposition to the revenue sharing plan is palpable, as Senate Energy and Natural Resource chairman Jeff Bingaman (D-NM) staunchly opposes the proposition.

Bill Wicker, a spokesman for Bingaman, claims that directing money to only a few states “doesn’t make sense,” and that the Treasury cannot withstand additional pressure on its finances.

“With the government at risk of default, how could anyone seriously consider blasting an enormous new hole in the Treasury, to the tune of many, many, many billions of dollars.”

Don Briggs, president of the Louisiana Oil & Gas Association, says he would be in favor of severance tax revenue sharing as it would incentivize states to drill off of their coasts. However, Briggs contends that states would be heavily dependent on Louisiana’s pipeline transportation and infrastructure, thus, “Louisiana should still retain a larger portion of those tax dollars, given our risk position in the Gulf.”

An alternate plan, proposed by Texas oil and gas billionaire T. Boone Pickens, attempts to start a new natural gas program whereby commercial trucks, certain auto fleets and vans are converted from diesel fuel or gasoline to natural gas.

In addition, the plan calls for a $1 trillion investment in wind turbine farms to offset the use of natural gas for power generation.

Pickens claims the conversion would enrich natural gas producers, in addition to diminishing the nation’s dependence on imported oil to the tune of $300 billion per year.

Briggs says as long as Pickens’ plan does not include “unsustainable and uneconomical wind power projects” and instead revolves around cost effective and proven technologies like natural gas, he would endorse the plan.

Unconventional drilling methods, such as hydraulic fracturing and horizontal drilling, have drastically increased production, which is expected to quadruple by 2040 according to a recent Baker Institute for Public Policy study.

The increased supply of natural gas has reduced prices, after a period of volatility during 2006 and 2008. Natural gas had traded between $4 and $5 per thousand cubic feet (MCF) on the New York Mercantile Exchange in 2011.

Robert Ross is a researcher and social media strategist with the Pelican Institute for Public Policy. He can be contacted at rross@pelicaninstitute.org, and you can follow him on twitter.

WASHINGTON, D.C. – President Obama’s proposed 2012 budget would remove tax incentives and subsidies for oil and natural gas production and transfer increased funds to renewable energy projects. The American Petroleum Institute, on behalf of over 450 corporate members, has countered with research that suggests tax increases would impede job creation and, in the long-run, lower government revenue.

The Energy Department estimates that repealing these tax advantages would save $3.6 billion in fiscal year 2012 and $46.2 billion over the next decade. However, previous attempts by the Obama Administration to enact such tax increases have proved futile, failing twice in the Senate in the past three years.

Jack Gerard, API’s chief executive, says a renunciation would eliminate thousands of new jobs and that over time, as companies adjust, the losses would only accelerate. He also forecasts a mutually undesirable outcome for the federal government, since higher tax rates could lower revenue “as a result of foregone revenue from projects the tax hikes would prevent going forward.”

API’s statement also disputes the administration’s claim of green job creation. The trade association asserts that from 2000 to 2008 the oil and gas industry invested over $58 billion on low and no-carbon energy technologies, more than government and other private sector industries combined.

Jackie Savitz, senior campaign director for Oceana, the world’s largest ocean conservation organization, isn’t swayed by API’s logic.

“The Industry makes investment decisions based on what will give the best return. Not based on how generous the government was with tax breaks… The industry’s threats are without merit. We have heard them before, and they never turn out to be true.”

Heather Emmert of Environment America, a federation of state-based advocacy organizations, believes concern over reduced production is erroneous. She cites a Treasury Department study.

“Eliminating all subsidies for oil companies would decrease production by ‘less than one half of one percent, even in the long run.’” Emmert also cites Breakthrough Institute research, which reports that the energy industry invests 0.23% of total revenue in research and development – below the 20% of the pharmaceutical industry and less than the 2.6% private industry average.

Sen. Mary Landrieu (D – La) has not given her approval and is “very concerned about the president’s attack on the oil and gas industry.” Senate Minority leader Mitch McConnell (R – Ky) shares Landrieu’s opinion. “We don’t really believe you cut spending by raising taxes.”

Rep. Earl Blumenauer (D – Or), on the other hand, says “It’s no longer necessary to simply fatten the bottom lines of five of the most profitable corporations the world has ever known.” At least ten Democratic senators have endorsed higher taxes on the oil and gas industry, including senate majority leader Harry Reid (D – Nev).

Democrats and Republicans need to come to a consensus soon since the stopgap-spending bill, which maintains government spending at 2010 levels, expires on March 4th.

Robert Ross is a researcher and social media strategist with the Pelican Institute for Public Policy. He can be contacted at rross@pelicaninstitute.org, and you can follow him on twitter.

On August 18th, approximately 500 individuals crowded the Pontchartrain Center in Kenner, Louisiana, to hear from Kenneth Feinberg and Mary Landrieu (D-La). The two speakers explained the new Gulf Coast Claims Facility, highlighted its independence, and assured the audience of their concern for victims of the oil spill.

Feinberg, Chief Administrator of the facility, appeared travel weary at his second town hall of the day (the first in Houma) and his seventh visit to Louisiana in the last two months. But he had good news to share: the facility will be ready to commence in less than a week, transitioning away from BP on the morning of August 23rd. He also pledged an outcome to all individual claims within two days of receiving them, and within seven days for business claims.

Kenneth Feinberg, Chief Administrator of the Gulf Coast Claims Facility

Alongside logistical information and responses to questions, Feinberg’s primary message was that people would do well to trust him and his independence. “[The GCCF] is not part of BP. It is not part of the government. It is an independent program, established by the administration and BP… I am beholden to neither of them. I am working for you.”

Landrieu introduced the event and echoed Feinberg’s sentiment that there is nothing sinister about the facility. “I just want you all to know that your delegation, along with your elected officials, are working very hard for you… Today we really want to spend the next 45 minutes talking about this claims process and getting your questions answered.”

She also sought to emphasis the collaborative aspect of the facility, that she and Feinberg are working together and that they hold each other in high regard.

“He is an expert in what we have asked him to do. He has already handled many claims processes, starting with the settlement when soldiers came back from Vietnam and there were arguments about Agent Orange… and he is very well respected. He is being paid by BP – we don’t want the taxpayers to have to pick the expenses associated this – but he is independent in his rule making and judgments on these claims. I think the president and BP have made a good choice here.”

Feinberg later joked back that “there is no senator in Washington that has been more on my back about this program than Senator Landrieu.”

Vietnamese individuals had a notable presence, but from the outset there were technical difficulties with the translation system. To remedy the situation, Landrieu offered an additional meeting at the end, just for the Vietnamese community.

May Ngyen, a representative of the Mary Queen of Vietnam Community Development Corporation, said that the language barrier manifested itself in more ways than one might anticipate.

“It’s still a problem. We found out about this meeting very last minute… We did all this organizing in the last 24 hours, and we got 50 people – so you can imagine what our reach would have been if we’d had more days… The entire process is going through mainstream media. We have to go on the Vietnamese radio station and announce about this.” After the meeting, some members of the audience disputed the accuracy of one translator.

Listen to Ngyen’s remarks here (three minutes):

Darlene Kattan, Executive Director of the Hispanic Chamber of Commerce of Louisiana. Listen to her question and Feinberg's response below (three minutes).

Darlene Kattan, Executive Director of the Hispanic Chamber of Commerce of Louisiana, attended and questioned Feinberg on the economic methodology being used, and how this might vary across demographics. While Feinberg did not go into finer details, he assured her and the audience that all individuals and businesses eligible for claims will be subject to the same methodology.

To reinforce Feinberg’s points of the meeting, GCCF representatives handed out copies of a “Claimant Bill of Rights.” The document promoted eight such rights, the first being equal treatment.

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at fhodgson@pelicaninstitute.org, and one can follow him on twitter.

Would you like to read an excessively optimistic view on health care reform? Sen. Mary Landrieu’s op-ed highlights what she believes to be the greatest ObamaCare achievements, praising the full coverage of Louisiana’s children, young adults, and seniors.

Claiming that “congress has finally delivered meaningful health care coverage to all Americans,” Sen. Landrieu argues that the new reform will “save businesses thousands of dollars each year which will allow businesses to potentially increase wages or hire more employees.”

But Sen. Landrieu is overly confident – and even deceptive – because she is neglecting important facts behind the new health care reform: its costs. As Michael Cannon from the Cato Institute points out:

“Obama’s plan [aka: ObamaCare] would vastly increase the size and scope of the federal government, and increase our already record federal deficit”

The Congressional Budget Office estimated costs to be around $940 billion, but this projection takes into account only the costs to expand current health insurance coverage. Considering other unavoidable spending provisions, the costs would amount to around $1.2 trillion. And that is a conservative estimate. Further, the new health care reform will force nearly all Americans to purchase health insurance, set price controls on the private health insurance industry, and increase the federal deficit by providing more than $1 trillion in subsidies.

Sure, Landrieu is right to claim that these reforms will extend coverage to more children, seniors, and sick individuals. Unfortunately she fails to acknowledge that this will not be sustainable in the long run.

“The idea is to require personal responsibility. People have to have insurance but we’ll help you pay for it.”

This is a strange kind of personal responsibility. Real personal responsibility requires individual people to take ownership of their actions. If the government mandates behavior, it can hardly be thought of as people taking the responsibility to accomplish something on their own.

To make matters worse, Landrieu follows up with a promise that the government will help pay for this required behavior. It seems that she views personal responsibility as something that ought be legislated and subsidized rather than left to the individual where it belongs.

If legislators focused on addressing the unnecessary rules and regulations that drive up the cost of insurance and health care, more individuals could afford to act responsibly. That would be better for the individual and less expensive for the government.

CREW executive director Melanie Sloan argues, “We all know politicians don’t give up campaign contributions – much less $25,000 – without a very good reason. It appears Sen. Landrieu’s reason may have been to avoid a scandal or, even worse, a federal investigation into some of her contributions.”

Marc Elias, Senator Landrieu’s campaign lawyer, called the lawsuit “frivolous” and said the campaign wanted to protect the identity of donors who “may not have done anything wrong.” The CREW complaint however argues that the only two scenarios in which “dirty” money may be donated to the Treasury are if a donor is under a Justice Department investigation, or has been convicted for making illegal contributions. In both of these cases, the identity of the donor must be made public.

Sloan follows up, “Our campaign finance laws were designed to ensure transparency. If Sen. Landrieu did nothing wrong, she has no reason not to come clean with the American people and explain why she turned over $25,000 in contributions to the Treasury.”

The Landrieu campaign will have 15 days to respond after the FEC provides its formal notification.