Obama cited the fact that the US produced more oil than it bought last year for the first time in 20 years and pledged to set new fuel efficiency standards for domestic trucks to further drive down oil imports and “what we pay at the pump”

TAEP president Alex Mills, however, was not impressed, saying Obama hid the fact that his administration would continue to target the oil and gas industry for increased taxes and more Environmental Protection Agency regulation and other red tape tangles.

A week before Obama’s speech, the EPA announced it would issue new methane emission regulations for the oil and gas industry, stating its intention to drive methane emissions down by 45% between 2012 and 2025.

Yet Mills said it was a no-brainer that oil and gas producers would want to eliminate methane emissions into the atmosphere, as that methane could have otherwise been sold.

He pointed out that the EPA’s own data shows that cows emit more methane than the oil and gas industry, which voluntarily reduced methane emissions by 17% between 2005 and 2012 – even while natural gas production increased 37% during the same period.

EPA figures also show that methane accounts for only 9% of total greenhouse gases in the US and natural gas accounts for only a quarter of the total methane emissions.

He said Obama also failed to mention that he had proposed, in every budget that he had sent to Congress, to increase taxes on the oil and gas industry.

“Two tax provisions that are on his chopping block are percentage depletion and the expensing of intangible drilling costs,” Mills said.

Mills said percentage depletion, a critical policy measure for smaller companies, has been in the tax code since 1926 and is available only to small, independent producers and royalty owners. Major oil companies are excluded.

Percentage depletion allows these small companies to deduct up to 15% of gross income from federal income taxes for reinvestment in future drilling and operation of current production. There are restrictions to make certain that only small producers can use this provision.

He said percentage depletion was one reason why so many small companies could continue to drill and produce, citing the fact that 96% of Texas’ wells were drilled by independents, and produced 93% of the oil and 85% of the natural gas last year.

The National Stripper Well Association recently released a study indicating that if percentage depletion was eliminated from the tax code, the gross value of the production that would be lost would be $US101 billion in Texas between 2015 and 2025.

Labour income would also decrease by $61 billion, and the Texas economic output would decrease by $207 billion.

“Needless to say, if President Obama’s tax and environmental policies became law, those crude oil imports would be on the rise again,” Mills said.