FOR IMMEDIATE RELEASE
October 20, 2007

Agriculture Needs Increased Energy Production, Not Increased Costs
Democrats’ plan to tax domestic energy production will drive up prices and dependence on foreign sources

WASHINGTON – As gasoline prices continue to creep upwards of $2.87/gal., America’s farmers and ranchers are feeling the strain of the increasing volatility of the energy markets in an industry that is already extremely volatile. The Democrats’ Energy Bill stands to perpetuate the problem of high prices by imposing increased taxes and fees on domestic energy production and limiting our domestic capacity to produce energy, particularly natural gas, further prolonging our dependence on foreign, less stable sources of energy.

“Instead of stifling domestic energy production with increased taxes, fees and repealing other incentives, we should be working to increase our nation’s capacity to produce energy. I’m at a loss as to why anyone would believe that increasing the cost of domestic energy production would lower the cost to consumers. I find it appalling that the Democrats would try to sell such a gimmick to the American people,” said Rep. Bob Goodlatte.

The U.S. fertilizer industry relies upon natural gas as the fundamental feedstock for the production of nitrogen fertilizer. Natural gas accounts for 70 to 90 percent of the cost of one ton of anhydrous ammonia – the building block for most other forms of commercial nitrogen plant nutrients. As a result of decreased natural gas production, down 40 percent since 2000/01, the domestic nitrogen fertilizer manufacturing industry has permanently closed 25 U.S. manufacturing facilities in the last six years, shutting down approximately 42 percent of its nitrogen manufacturing capacity.

In addition to fertilizer production, the U.S. farm sector depends on significant amounts of natural gas for food processing, irrigation, crop drying, ethanol biofuel production, heating farm buildings and homes, and the production of crop protection chemicals.

The taxes/fees contained in this bill will impede new domestic oil and gas production, discourage investment in new refinery capacity, and make it more expensive for domestic energy companies to operate in the U.S. than their foreign competitors. By increasing the cost to produce domestic energy, the Democrats are essentially increasing the cost to use domestic energy.

“The additional fees on domestically produced oil and gas send us reeling backward in our efforts to encourage domestic energy production and further increase the cost of fuel and fertilizer for American farmers and ranchers already facing increased input costs. Americans should not have to bear the costs of this bad policy,” said Rep. Bob Goodlatte.

The Democratic Leadership seems determined to stifle domestic energy production by inserting cost increasing provisions at every opportunity. Although an unlikely vehicle for tax increases, the House-passed farm bill also contained domestic energy production restricting provisions. These provisions would impose a “conservation of resources fee” on oil or gas produced from certain Outer Continental Shelf (OCS) deepwater leases and repeal provisions of the Energy Policy Act of 2005 that preclude the Bureau of Land Management from collecting certain fees.

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