Plan to close oil industry loopholes draws fire

However, the proposed tax changes could have "grave economic consequences," according to a study from the American Energy Alliance, which lobbies for the oil and gas industry.

The study, based on research from Louisiana State University economist Joseph Mason, says the proposed changes will trigger an initial loss of 154,000 jobs in the energy sector and related fields by the end of next year.

In addition, the changes would result in more than $340 billion in lost economic output, and $68 billion in lost wages nationwide, according to AEA and Mason.

"The Obama administration aims to single out U.S. oil and gas firms and raise the cost of energy for consumers by eliminating crucial tax credits to which all taxpayers are entitled," Mason said in a statement.

0:00/3:23'Fracking' threatens local water supply

The proposals that the industry objects to are an elimination of a manufacturing tax credit and a modification to the rules for "dual capacity taxpayers," which are primarily oil and gas firms that make "tax like" payments to foreign governments.

According to research from Concept Capital, ending the manufacturing credit would add $15 billion to the federal coffers, while changing the dual capacity rule would raise $8.5 billion. The administration has proposed using that money to offset the cost of new tax breaks for small businesses and infrastructure spending, among other things.

Those who support closing the loopholes argue that the oil and gas companies are among the most profitable in the world, and that the costs could be easily absorbed.

"American taxpayers are currently giving money to BP, Shell, Exxon and others by virtue of these subsidies," said Kert Davies, research director at Greenpeace. "Correcting that and making them pay those costs will allow a more level economic discussion."

Behind the war between Obama and big business

In addition, he pointed to the thousands of jobs that could be created by subsidizing the development of alternative sources of energy, which is a stated goal of the Obama administration.

But critics say the changes would unfairly penalize minor energy firms and hurt small businesses that rely on big oil and gas companies for their survival.

Alex Morris, an analyst at Raymond James who covers big oil companies such as BP, said it's hard to say exactly how the proposed changes will impact the industry, although he expects there to be some job cuts as a result.

"Any time you eliminate millions of dollars in tax credits, the loss will have to be made up somewhere else," he said. "At some level, there will be an impact on employment." 

Intel CEO: Stimulus didn’t workOil platform owner opposed safety rule