Often when we blog here at OIPA-OKOGA, we create original content for our members, supporters and policymakers around a specific issue of interest.
And then are times like today, when The Oklahoman Editorial Board penned a piece that said it best: [There’s] No overstating oil-gas industry’s impact on Oklahoma.’ We agree, and a recent study from the state Chamber of Commerce highlights just how critical a healthy and competitive oil and natural gas industry is to the state.
From The Oklahoman:
- As Oklahoma continues working to diversify its economy, a report from the State Chamber Research Foundation provides a reminder of the impact of our heritage industry, oil and gas. Long story short: It remains significant.
There’s also another side to this coin: relying so heavily on a single industry to provide state revenue and generate economic growth is risky business. More importantly, The Oklahoman reminds us how damaging overly burdensome regulations and increased tax rates can be on the state’s economic health. Using the downturn to examine this notion, they said:
- Two things came through, they said. One is that “state tax collections and the overall economy remain highly sensitive to changes in oil and gas industry activity.” The other is that “the severity of the collapse in taxes underscored the importance of examining more than simply production taxes when forming oil and gas tax policy in Oklahoma.”
The Chamber’s report looked at this very issue and found that the commodity price downturn from 2014 to 2016, cost the industry an estimated 21,500 jobs and $8.9 billion in earnings. This impact rippled statewide, as the report estimates an additional 48,300 jobs and $22 billion were lost during this period. This is a striking reminder of how large of an impact continued oil and gas production is for not just the industry, but the state overall.
In other words, ensuring oil and gas development continues to thrive is in the best interest for all Oklahomans. This is particularly relevant considering the current discussion around government spending reform in the state legislature, with the report finding that Oklahoma’s oil and gas companies already face one of the highest tax burdens of energy producing states.
Some highlights of the report:
- Oklahoma oil and gas companies paid $2.43 billion in corporate taxes in 2016
- Oil and gas companies accounted for about one-fifth of all corporate taxes paid by state businesses in 2016
- The corporate tax burden for Oklahoma oil and gas companies was third-highest among the top energy producing states in 2016
- For the 2019 fiscal year, Oklahoma’s 5.1 percent gross production tax ranks 5thhighest among the top 16 energy producing states
Taking into account just how crucial development is to Oklahoma’s economic well-being, increasing the already high tax burden on the state’s oil and gas producers could be disastrous. Instead, law makers should be cognizant of the role oil and gas plays in Oklahoma, as working to support it rather than hinder it benefits all Oklahomans.
Read the entire Oklahoman editorial by clicking here.