Don't add bad policy to oil industry headwinds

While the American oil and gas sector was in the midst of its renaissance over the last decade, it was difficult to imagine a situation in which profits, jobs, and domestic energy production would slow down in any significant way.

Booming oil production was transforming tiny towns in the coldest reaches of North Dakota into some of the nation's most valuable real estate. And thanks to advanced extraction processes and the discovery of vast new reserves, the United States surged to become the world's top producer of natural gas. The industry seemed to be on an upward glide path with no end in sight.

Because of that spectacular growth, the oil and gas industry stands as one of the country's most important sources of employment, wages, revenue, and economic opportunity. Nowadays, 10 million Americans look to the sector for their livelihoods. But for the first time in a long time, with crude oil and natural gas prices well below the levels that helped drive the boom, it's clear that the industry isn't immune to the pressures of a down market.

The energy industry, like any commodity producer, is accustomed to coping with business cycles and market price fluctuations. That resilience is threatened, though, by ill-conceived, counterproductive energy tax policies – like those on the table in Alaska.

Few people are likely to think that the oil industry is strapped for cash. Indeed, with billions in profits reported every quarter, the nation's oil companies remain behemoths in the business world, dwarfing almost every other sector. What's too often overlooked, however, is the astonishingly large capital investment required to generate those profits and shareholder returns.