Last week, Public Service Commissioner “Bananas” Foster Campbell trotted out for the millionth time an idea Louisiana’s voters and elected officials have rightly rejected.
Campbell wants to stick the state’s petrochemical and refinery industry with an oil processing tax that would – he says in an e-mail which circulated among some of the state’s opinion-makers – raise billions of dollars for the state’s coffers.
The impetus for another push for the tax nobody wants? ExxonMobil’s disclosure in its suit against the federal government last week in Lake Charles that the “Julia” field in the deepwater Gulf has as much as a billion barrels of recoverable oil. That, plus it’s an election year and rumors persist that Campbell, fresh off an unsuccessful crusade to stop AT&T from merging with T-Mobile (he lost a vote 4-1 at the PSC last month to investigate the merger), will throw his hat in the ring for governor at the last minute. Campbell ran for governor on an oil processing tax in 2007, finishing fourth behind Bobby Jindal, Walter Boasso and John Georges with 12 percent of the vote.
Campbell says that disclosure proves Julia is “the largest discovery ever in the Gulf of Mexico,” and it cements the fact the oil companies will always be in Louisiana no matter how badly the state government might abuse them with punitive taxation.
“This disclosure should finally force the oil lobbyists and their political supporters to stop saying the oil companies are leaving Louisiana,” Campbell’s e-mail was quoted as saying by the Baton Rouge Advocate. “We have the oil, refineries, pipelines, infrastructure and Mississippi River. They’re not leaving until the oil is gone.”
Of course, the Julia field disclosure proves nothing where Campbell’s tax gambit is concerned. Economic activity in Louisiana’s petrochemical industry is largely flat, even though Marathon’s $4 billion refinery expansion in Garyville two years ago did give the industry a sizable boost. Jobs in the industry are drifting to Texas ever so slowly.
And Campbell ought to know based on his own experience in Bossier Parish that just because you have oil and gas that doesn’t mean somebody will crawl all over you to get it. The Haynesville Shale might be America’s most productive natural gas play, but the rig count in Louisiana overall is flat. The industry is griping about an unfavorable legal climate which is cramping activity. Sure, the Haynesville Shale is a natural gas play and not an oil play, but when prices are soft and conditions are more favorable elsewhere, like for example in the Eagle Ford play in Texas or the Utica Shale in Ohio, you just don’t get the growth you expected.
Amid what looks like an underperformance in the industry – and amid a terrible oil and gas climate imposed on the state by the federal government – it’s beyond unwise to push a massive tax increase on oil processing.
What’s more, the philosophy of an oil processing tax is wrong on several levels.
The state of Louisiana shouldn’t be looking for sources of revenue which target narrow segments of the economy. It’s unfair to demand that one industry or economic sector shoulder the tax burden; once that precedent is set nothing will stop the majority not involved in that sector from demanding a larger and larger share of its flesh until it flees.
Further, the state shouldn’t be looking for more revenue at all. Louisiana’s problem is that its public sector is too large and its private sector not large enough. In addition, our business community bears too large a share of the tax burden compared to other states with better economic and population growth. Louisiana needs to get better bang for its current governmental buck before looking for more revenue; an oil processing tax would only prop up the current bloated levels of spending.
And finally, an oil processing tax signals to new industries which might be considering setting up shop in Louisiana that rather than treating them as important partners in prosperity for our citizens, our government sees them as cash cows to be exploited by politicians. If you can’t see the negative effects of such a signal, just see the national economy in the Age of Obama.
What would be a lot better idea than Campbell’s oil processing tax would be to get Campbell out of political office this fall, so that he’s no longer in a position to act on his immature and ill-conceived notions on taxation and other government intrusions into commerce. North Louisiana has no shortage of up-and-coming Republican politicians; one of them should challenge Campbell for his Public Service Commission seat.
Such a challenger can expect vigorous support from us here at the Hayride.