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  • Energy Tax Facts
  • 10 Sep 21

Natural Gas Intelligence: U.S. Oil, Natural Gas Trade Groups Warn Proposed Methane Tax Could Backfire

Nearly 130 business and labor groups led by the American Petroleum Institute (API) are urging Congress to oppose a proposed tax on oil and gas methane emissions and instead push for direct federal regulation.

Senate Democrats are considering the Methane Emissions Reduction Act of 2021 for inclusion in their $3.5 trillion budget reconciliation bill. 

Introduced by Democratic Sens. Cory Booker (NJ), Sheldon Whitehouse (RI) and Brian Schatz (MI), the methane bill would levy a fee on emissions of the potent greenhouse gas (GHG) from oil and natural gas facilities.

In a letter to Senate leaders, API and its allies said the bill could have the opposite effect of what legislators intend, causing emissions to increase. API represents 600 companies in the oil and gas sector.

The tax would be calculated using “a complicated formula,” assessing companies “based on their share of production or handling (not actual emissions) and the average emissions intensity in the oil and gas basin in which they operate,” API said.