The American Petroleum Institute (API), based in Washington, D.C., is the only national trade association representing all aspects of America’s oil and natural gas industry. API has nearly 400 corporate members—ranging from major oil company to small independents. Member companies are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that are involved in all segments of the industry.
API’s mission is to: “influence public policy in support of a strong, viable U.S. oil and natural gas industry essential to meet the energy needs of consumers in an efficient, environmentally responsible manner.”
The organization has traditionally worked primarily in domestic markets, however, lately work has expanded to include an international scope. API is currently focused on several advocacy initiatives, trying to influence public policy in the ways industry demand. The oil and natural gas industry can be a volatile one, so API continues to strive to make the industry heard.
Most notable on the policy front are environmental change initiatives. Denise McCourt, Director for API’s General Manager for Membership, states that API is well-versed on policy for climate change. “We recognize [climate change] as a serious issue, and a global issue,” she says, adding, “API’s position has been very transparent.”
API is indeed transparent—committed to the advancement of the industry on a global scale. On the website, there are several documents available to help industry understand what direction climate change regulation is going. According to API, industry has so far recognized that with development of mandatory climate change, there is an emerging focus on improving quality of emission estimations. In order to guide industry’s need for understanding, API, along with its global affiliate IPIECA, and its European partner CONCAWE, have released a document entitled “Addressing Uncertainty in Oil & Gas Industry GHG Inventories: Technical Considerations and Calculation Methods.” Being able to address uncertainty around climate change measurement issues means companies can be better prepared for economic impacts of emissions initiatives. This particular guide complements API’s GHG Methodology Compendium (API Compendium) published this August, and is meant to serve as a pilot test version. The document includes necessary background and key details on measurement uncertainty and statistical calculation methods that can be used. To download the guide, visit API’s website at www.api.org.
McCourt says that another primary area of concern, especially after the global recession, is tax structure in the U.S. “Since our founding, our industry has been involved in taxing issues. API represents some of the largest companies in the world. The tax consequences for these companies can be enormous. There has to be an attention to the impact that taxation has on our ability to find these forces around the globe.”
Difficult tax structures directly impact the industry’s ability to be competitive in the global marketplace, and currently, companies making up the country’s oil and natural gas industry are some of the largest taxpayers in the U.S. As reported by API: “According to the Energy Information Agency, in 2007, the effective income tax rate of the major industry producers was 40.4 per cent (based upon income tax expense of almost $85 billion), which was significantly higher than the statutory U.S. tax rate of 35 per cent”. However, the problem is that these figures don’t cover the entire tax burden paid by these companies. Oil and gas companies in the U.S. also face production taxes, import duties, and property taxes. In 2007, these costs amounted to $12 billion of revenue for various governments. API also reports that these companies “collected and remitted to government agencies over $48 billion in excise taxes imposed on its products.” Clearly, tax structures have a serious impact on competitiveness for U.S. oil and gas players.
API supports the implementation of sensible taxing policy that considers broad based approaches over industry specific proposals, supports efficient approaches to tax collection and weighs the impact of taxes on the ability of U.S. based business to compete in the world market place. Toward that end, we are working to address the Administration’s FY 2010 budget outline that includes at least $80 billion in tax increases on the U.S. oil and natural gas industry. These tax increases would discourage domestic oil and natural gas production and could lead to a greater reliance on foreign imports, fewer well-paying American jobs and higher energy costs to consumers. We believe it is important to note that, at a time when we need to work to turn this economy around, these proposals undermine the creation of jobs and this nation’s energy security.
Focus on industry standards, training, and certification
API operates a variety of programs in addition to advocacy, including research and statistics, operating standards, certification programs, and education.
McCourt explains that API is “most well known for industry standards”. API has been developing industry standards since its founding in 1919. “We have about 550 industry standards which are used around the world. Because of the respect for those standards, we have also developed credentialing programs for both companies that produce products for the oil and gas industry, as well as individuals who do inspections. A component of what we are doing has to do with the basis in our standards and credentialing.”
API has also maintained worldwide leadership in the energy sector with their Training and Certification Programs, which serve an integral role in the global oil and natural gas sectors. The U.S. industry relies on equipment, products and services approved by at least one of the organization’s certification programs. Those programs include the API Monogram Program, APIQR, Individual Certification Programs (ICP), Perforator Registration, Engine Oil Licensing and Certification System (EOLCS), and API Training Provider Certification Program (TPCP).
The importance of communication
API maintains a thorough level of communication with its members—so that timely information on advocacy issues gets to everyone. “We have a very strong advocacy position right now, so we are communicating with our members through a variety of mechanisms, particularly on the congressional and state legislative issues” says McCourt. President and CEO, Jack Gerard, communicates directly with members a regular basis to inform them on what is going on in congress, illustrating the organization’s commitment to its membership.
McCourt explains that the membership of API will ultimately be its own representative voice, showing strength in numbers on all issues affecting the industry. “The action of our members speaks louder than anything else. When you look at who is spending the money on emerging tech, you will find that the oil and gas industry is spending 44 per cent of the money on emerging technologies.”
On the future of oil and gas in the U.S. “We will be the energy providers in the future. The companies we represent are making the commitment today to look at the potential they have in the future. They are taking a leadership role in addressing issues”.
For more information on API policies and initiatives, visit www.api.org