Kansas oil, gas producers rail against regulation

The Democrats in Washington just don't get the Kansas oil and gas industry.

That was a message repeated over and over by speakers Monday at the annual meeting of the Kansas Independent Oil and Gas Industry.

Members of KIOGA are angry at the Obama administration and what they see as its anti-producer agenda. Just halt the punitive regulations, they say, and the industry will produce more energy and create more jobs.

Two members of the state's congressional delegation, Lynn Jenkins, R-Topeka, and Tim Huelskamp, R-Fowler, were preaching to the choir when they tried to shed light on what Congress is doing and why.

Jenkins said it is critical for Congress to "get the boot of regulation off your neck."

Huelskamp described the Obama administration as "committed to keeping you from producing more."

They said some key decisions will be made in coming months as Congress re-examines tax policy to better match federal revenues with expenses. The "super committee" of representatives and senators created by the debt bill will look at budget cuts, but will probably also look at ways to raise revenue by closing loopholes.

But one man's loophole is another man's critical business tool, they said.

In particular, KIOGA members are worried that Congress will eliminate the accelerated intangibles provision, which allows oil and gas producers to expense all drilling costs within the year incurred.

"It's not a loophole," Huelskamp said. "It's a way of doing business."

Huelskamp and Jenkins said cuts will have to come from bigger programs, such as Social Security and Medicare — but more importantly, the federal government needs to remove regulation so the country can start growing again.

KIOGA members also worry about the depletion allowance, which allows owners of producing wells to deduct 15 percent of gross oil and gas income per year.

Both Jenkins and Huelskamp said they expected little success from the super committee because of the sharp division in how Democrats and Republicans see the world.

Jenkins also reminded the audience that Republicans are limited in their ability to change the course of Washington. They can block new legislation, they can negotiate on deals, but they can't force new measures.

That will become especially important at the end of 2012 when the Bush tax cuts are set to expire.

"We can stop the bad stuff," she said. "But we only have one house of Congress. We can pass... things and (Sen.) Harry Reid will let them die.

"The only way to fix that is the power of the ballot box."