American Oil and Gas Reporter - June 2017 - 120

Kansas Strong's latest public education campaign focuses on explaining
to people how oil and natural gas
make their lives better, new Executive
Director Warren Martin advises the
Kansas Independent Oil & Gas Association's midyear meeting, April 1921 in Garden City.

the public, and industry.
"We are going to continue our teacher
workshops, but are evaluating how to
make them more effective," he advised.
In addition, he said Kansas Strong
was looking for ways to interact more
directly with students, such as sponsoring
an oil- and gas-related project for the
state science fair.

Kansas Strong's public education program is focusing on millennials living in
the state's Northeast Corridor, utilizing
social media. Martin continued. One emphasis is a series of 12 videos that explore
life without oil and natural gas. "Our
first video was 'life without oil and gas
is life without beer,'" he related. "We
went to a brewery and talked about how

oil and gas was used to brew beer."
Another video looks at how natural
gas runs a glass blower's furnace, Martin
detailed. "We have gone to a pavement
company. We are talking with a farmer
and a rancher. We are going across the
board, showing how oil and natural gas
play into every aspect of our lives," he
said.
Martin encouraged anyone active on
social media to "like" Kansas Strong's
Facebook page and help it share those
videos.
The third leg, Martin finished, is educating industry employees, from the field
to the board room "how to more effectively
communicate about the industry and the
contributions we make to the greater
good of humanity."
Remarking that "I am a strong believer
you have to win the argument first, then
you can present the facts," Martin said,
"Everything we are producing is designed
to win the argument. It is designed to
really promote the industry, not just the
common staple retort, 'We aren't that bad.'
"We want to get in front and say, 'We
are great. Here is what we are contributing;
here is how important our industry is to
the world.'"
r

Oil Gets Warmer Washington Welcome
GARDEN CITY, KS.-Washington
has become a much friendlier place for
the oil and gas industry since Donald
Trump became president, but that hasn't
eliminated concerns about federal income
tax reform or foreign ownership of U.S.
refineries.
President Ed Cross told members of
the Kansas Independent Oil & Gas Association that he was in Washington
about a week before their midyear meeting, April 19-21 in Garden City. "I have
to say, it is a much different atmosphere
now. You feel a welcome rather than a
hostile environment where you can hardly
get a meeting with anybody," he related.
Cross said he was afforded the opportunity to meet with White House staff, as
well as Energy Secretary Rick Perry and
Treasury Secretary Steven Mnuchin. "They
were eager to listen to the concerns of the
small businesses that make up the independent oil and gas industry. It was a
good opportunity to discuss things such
as percentage depletion, but we also talked
about market dynamics. Those meetings
were very productive," he assessed.

Tax Reform
Nevertheless, Cross and KIOGA Chairman Nick Powell, president of Colt Energy

Inc., both expressed concerns about the
status of percentage depletion in the
debate about federal income tax reform.
"I am very worried," Powell admitted.
"If they bring (the corporate income tax
rate) down to 25 percent, but we don't
keep percentage depletion, it is going to
be very, very harmful."
A key issue, Cross advised, is whether
lawmakers use static or dynamic scoring
to determine the economic impact of tax
reform. Under static scoring, he explained,
Congress must replace each dollar in revenue lost to lower rates with another
dollar of offsets for the plan to be revenue
neutral, whereas dynamic scoring allows
Congress to consider economic activity
generated by lower tax rates.
"We would like to see them use the
dynamic model," he stated, adding, "Some
say they are going to do that; some say
they aren't sure."
Cross noted that the House Ways and
Means Committee was counting on a
border adjustment tax (BAT), which is
estimated to bring in $1.1 trillion, to
offset the cost of lowering the corporate
income tax rate from 35 to 20 percent.
However, "not every industry is in
favor of the BAT, including some refiners,
who contend it would increase the cost of

120 THE AMERICAN OIL & GAS REPORTER

fuel by 20 percent," he observed. "If the
BAT fails, Ways and Means will have to
look for revenue elsewhere. That is where
percentage depletion is vulnerable."
"I don't think they are going to get
the border adjustment tax," opined Powell,
who pointed out that President Trump
favored lowering the corporate rate to 15
percent. (Editor's Note: On April 26,
President Trump released a plan to lower
the corporate income tax rate to 15 percent.
It did not include a BAT.)
Cross said the industry had some supporters on the Ways and Means Committee,
including Chairman Kevin Brady, R-Tx.,
and Kansas 2nd District Congresswoman
Lynn Jenkins, whom he described as "a
real champion for us," and who chaired the
energy tax working group for tax reform.
However, he acknowledged that a key
committee staffer with whom he met earlier that month in Washington "still thinks
of percentage depletion as a subsidy."
Powell agreed that "we are lucky we
have Jenkins in there."
But, he noted, she has announced her
intention not to run for re-election in
2018. "I hope we can get something done
in the next year, if it is going to get
done," Powell remarked. "It is going to
be a battle. We have to make sure the
American Oil and Gas Reporter - June 2017

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