Friday, March 16, 2012YOUNGSTOWN, Ohio – U.S. Sen. Rob Portman told reporters Thursday he plans to “check into” Gov. John Kasich’s proposal to increase taxes on oil and gas companies in the state to pay for an income tax cut.
Portman, R-Ohio, who during a recent visit to TMK IPSCO’s Brookfield plant cautioned against the federal government getting in the way of development of the Utica and Marcellus shale plays, said he has not seen Kasich’s proposal to bring the tax on oil and natural gas up to 4%, which has already drawn a rebuke from the Ohio Oil and Gas Association.
Exploration of the shale plays is spurring big projects in the region by TMK IPSCO, V&M Star, Exterran Energy Solutions, Weatherford International, Chesapake Energy Corp. and MarkWest Energy Partners, and, most recently, Shell Chemical LP, which announced yesterday it plans to build a $3.2 billion petrochemical plant in nearby Pennsylvania.
“We do need to be careful that we don’t assume” projects will continue to be announced in the region, particularly in the Marcellus play which has less oil and valuable wet gas, he said during a conference call.
“People believe there is enough natural gas, oil and wet gas in the ground, that this is a decades-long economic opportunity for Ohio. But right now, with the price of natural gas so low, they aren’t moving ahead with some of the dry gas wells.”
The Utica shale offers “different” opportunities due to the mixture of dry natural gas, oil and wet gas, and having toured the region and spoken with “folks who are making the business decisions,” he said there may be “less of an incentive” for them to move forward with wells that just have dry gas while the price is so low.
The senator alluded to his recent visit to TMK when he responded to a reporter’s question regarding the state’s 7.7% January unemployment rate, which is lower than the 8.3% national rate. Portman attributed the Ohio jobless rate in part to manufacturing increases in the state. He pointed out that TMK, which threads pipe for the oil and gas industry, has hired 75 people over the past year, 38% of whom were unemployed
Portman offered a different perspective from that of his Democratic colleague, Ohio senior U,S. Sen. Sherrod Brown, regarding the role of speculators in high gas prices. Brown, citing a February report in Forbes, said earlier in the week that oil futures speculation added 56 cents per gallon to the cost of gas.
Instead, Portman blamed rising demand due to the global economic recovery and constrictions on supply. “We need to develop our own resources more,” he remarked.
That’s why it's important to get approval of the Canadian Keystone XL pipeline, he saidd, and why the Utica shale is “so exciting for us in Ohio because there’s a lot of oil in Utica,” he added. “That's why we need to loosen up the restrictions on exploration and development on federal lands including in Alaska and off the continental shelf where the permitting process has either been delayed or denied.”
Portman pointed to price increases due to instability in oil-producing parts of the world. The activity in Iran is “very concerning to people” and “the markets will respond to that. Some people would call that speculation,” he said. “The reality is that people bet on the future in terms of these oil prices, another reason for us not to just increase supply but to be sure that supply doesn’t come from dangerous and volatile parts of the world.”
During his response to a reporter’s question about his NCAA basketball tournament bracket, Portman defended President Obama’s presence with British Prime Minister David Cameron at a first-round game Tuesday in Dayton. The trip had come under criticism from members of Portman’s party, who questioned why the president was taking the time when he should be working on addressing issues to help Americans.
“I think it’s terrific the president went there,” Portman said. “I think it’s great for the area, and terrific that the prime minister and the president got some time together outside of the meetings they normally have.”
Ohio State University “does really well on my bracket," he added.
Copyright 2012 The Business Journal, Youngstown, Ohio.