America’s energy industry is facing a generational crisis. International markets and oil values have been heavily impacted as a result of the Saudi-Russia oil dumping war, and COVID-19 restrictions of freedom to travel have caused extreme reductions in consumption.
Amongst oil-producing states, Louisiana is, sadly, the worst-positioned to endure this challenge. In the Obama-era oil and gas downturn, our state lost more than 20,000 high wage jobs. Entering this year, Louisiana’s oil and gas industry was already struggling to compete with producers in neighboring states. This is a direct result of anti-growth policies coming out of Baton Rouge. High severance taxes and legacy lawsuits have injured Louisiana’s ability to attract new investment and restore oilfield jobs.
As market disruptions threaten oil and gas jobs across the nation, Louisiana is at heightened risk, with small and mid-sized producers among the most vulnerable. We must take action to protect Louisiana’s cornerstone industry and the scores of thousands of jobs that it supports.
My office is pushing every conceivable measure at the federal level to support American energy. We’ve communicated with President Trump and his administration, urging consideration of royalty relief for offshore production in the Gulf of Mexico and expedited regulatory reform. We’ve worked with the administration to open the Strategic Petroleum Reserve (SPR) as a storage option while private industry awaits a return in global demand, and we should utilize the SPR to its full capacity, including both private leasing and direct purchases of American crude. Further, the newly announced OPEC+ deal is a step in the right direction. It forces an end to much of Russia and Saudi Arabia’s oil dumping and manipulation of global markets. However, that action alone is insufficient given the magnitude of the current crisis. A combination of all these measures is necessary to provide a significant level of relief for U.S. energy producers and preserve American energy jobs.
We’ll endure this challenge, but we must position ourselves for a solid recovery.
To that point, Louisiana must go further. Industry in our state is fighting not only the current market but also an injurious tax and legal climate. Our state severance tax is 12.5% compared to 4.6% in Texas. If Baton Rouge doesn’t act now to temporarily halt or reduce the state severance tax, we’ll be looking at 12.5% of nothing. Now is a time of crisis, make or break, for thousands of Louisiana families. I authored a letter to Governor Edwards on March 23 encouraging Executive action to suspend or adjust Louisiana’s severance tax rate. As of today, the only response I’ve received was that the Governor was “in receipt of” my letter. That’s it. No answer.
The next few months will be critical for the future of the oil and gas industry in Louisiana. While we know that demand will return, wide-spread disruptions in domestic production would threaten U.S. energy independence and our national security. If we act now, we can mitigate injury to our workforce and U.S. production capacity. If we do nothing, Louisiana could face massive job losses and the permanent departure of our cornerstone industry.
This is a time when leaders stand for We, the People. This is a time when Louisiana deserves decisive action despite the agenda demands of trial lawyers and green new deal liberals. Will our state take the necessary steps to ensure Louisiana’s economic recovery? Will Baton Rouge recognize that there will be no recovery if we do not help the oil and gas industry survive these next few months? On behalf of thousands of Louisiana families, I am prayerful that the Governor’s answer will be… yes.
Congressman Clay Higgins represents Louisiana’s 3rd District in the United States House of Representatives.