The United States is poised for an “energy renaissance” that would give it independence from foreign energy supplies and create thousands of jobs, but it won’t happen without federal policies that expand domestic access to resources and give companies more regulatory clarity, Chevron Corp. CEO John Watson said last week.

In a speech to the Greater Houston Partnership, Watson said without some energy policy framework in place Chevron is hesitant to increase investments or boost hiring and production levels. Chevron is the second largest integrated producer in the United States after ExxonMobil Corp. and is one of the nation’s top producers both onshore and offshore.

“Even the best of energy companies can perform only as well as the legal and regulatory environment allows,” said the CEO. Of the $26 billion in total global capital spending this year, Chevron has allocated $7 billion for U.S. projects.

“We could achieve great things if America had a rational, robust and comprehensive energy policy,” said Watson, but “contradictory” federal policies have moved the nation in the opposite direction.

Watson said Texas was a good example of what could be achieved on a national level to remain economic in the face of debt issues — although he didn’t note that the state, unlike many others, is blessed with abundant oil and natural gas resources and does not have, nor need, a state income tax.

“Texas remains committed to what I believe is the fundamental solution to our economic condition — not taxing our way out of it but growing our way out of it,” Watson said. “And in any scenario for growth, energy can and must play a vital role.”

The oil and gas industry, he said, “supports more than nine million American jobs, and adds more than a trillion dollars to annual GDP [gross domestic product]. Even during the recession, our industry was still hiring, still investing and still generating tax revenues just about everywhere. Our contributions to the economy are often overlooked or taken for granted, but let me put it this way: if you think economic growth has been weak for the past few years, just try to imagine it without the investment, job creation, and investor returns of America’s oil and gas industry.”

U.S. energy policies are “paralyzed by a fundamental contradiction,” said Watson. “On one hand, there is wide consensus in America that we should strive for energy security. Whether we can be truly energy independent is debatable, but we can certainly do much more to enhance our country’s energy security. However, many of our policies are moving us in the opposite direction…”

As an example, he said conservative estimates put the size of the oil and natural gas resources in the waters around the United States at roughly 150 billion boe, which he said is the equivalent of more than 40 years of Saudi Arabia’s current oil production.

“But even as we talk about energy independence, the U.S. government has declared the Outer Continental Shelf on the East and West coasts off limits to new development. And as we know, the regulatory agencies have put a strong collar on the pace of development in the Gulf of Mexico and Alaska. While the U.S. government is issuing permits again in the Gulf of Mexico and has announced a new round of lease sales, exploration and production is still far short of where we should be.

“Meanwhile, the United States is vigorously supporting the development of deepwater oil and gas in Brazil,” he said, referring to a recent trip to Brazil by President Obama, which coincided with state oil company Petroleo Brasileiro (Petrobras) receiving $2 billion in financing from the Export-Import Bank of the United States. The bank is the official export credit agency of the United States, whose mission is to assist in financing the export of U.S. goods and services to international markets.

As one of Petrobras’ partners, Chevron supports Brazil’s hydrocarbon resource development, “but I would argue that we have an even bigger opportunity to build a stronger oil and gas industry in the United States,” said Watson.

An abundance of domestic gas resources also has led to proposals to export gas to Europe and Asia where the gas resources may fetch prices that are about twice as high. However, Watson said “it remains to be seen whether…that will prove to be economic.”

Watson also took issue with suggestions that oil and gas producer tax subsidies be discarded. “The suggestion is that an industry paying an effective tax rate of 43%, or about $86 million a day in taxes, royalties and fees, is somehow not paying its full share.

“What is actually at issue here are fundamental provisions of the tax code that apply to all manufacturers — thousands of companies…To single out one category of manufacturers — the large U.S. oil companies — for punitive tax treatment is neither consistent nor fair.”

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