Oklahoma energy leader calling on lawmakers to eliminate all tax credits for oil and gas industry
OKLAHOMA CITY – Lawmakers across the state say drastic measures are needed in order to make up a $1.3 billion budget shortfall the state is facing.
Public schools are having their budgets slashed by millions, causing some districts to fire teachers and cancel popular programs just to stay below the red line.
Under current proposals by Oklahoma lawmakers, tax credits that help the poorest Oklahomans would also be eliminated to save $76 million.
On Thursday, the Oklahoma Senate also approved a measure that would eliminate a tax rebate for at-risk oil and gas wells.
The rebate was originally created to help smaller producers operate older and unprofitable wells. However, as commodity prices dropped, more expensive wells have also become eligible for the rebate.
The credit cost the state $41 million in the current fiscal year, but is expected to cost the state approximately $133 million next year.
“Oklahoma is an energy state and the Legislature always will work to ensure state regulations aren’t standing in the way of the industry. But this tax break no longer makes economic sense for Oklahoma. State agency budgets are being cut as a result of the historic financial crisis, and lawmakers need to look at eliminating this tax break and any others that are costing the state too much money to help address the budget shortfall,” said Senate President Pro Tempore Brian Bingman.
Up until this point, lawmakers have been cautious about doing away with tax credits that affect the energy industry.
However, one energy leader is calling on even more drastic measures.
Mike Cantrell, a leader in the Oklahoma Independent Petroleum Association and the Energy Resources Board for years, is raising eyebrows with a recent post to Facebook.
According to the McCarville Report, Cantrell says the oil and gas industry should ‘surrender all tax credits.’
“For 40 years I’ve been a vocal advocate for Oklahoma’s oil and gas industry. As the state’s largest industry I have always thought that what’s good for oil and gas is good for Oklahoma. Today I depart from that belief. The state of Oklahoma is in dire financial straits; in large part because the states (sic) oil and gas industry is in a depression, due to low prices. An industry that has historically contributed up to 30% of the state’s revenue is, by some estimates, now actually taking more from our state than we are contributing.
As a lifelong oilman and a lifelong Oklahoman that, for me, is unacceptable. I’m not qualified to make a judgement about the efficiency of our state’s spending nor if more cuts are appropriate; but I am embarrassed by the fast growing number of our state’s finest public school teachers that have to take a 2nd or even a third job to make ends meet.
In this tumultuous time, the state’s oil and gas industry should “step up” and lead the way in surrendering all tax credits and even repealing or seriously modifying the “at risk well” provision which was intended to allow small producers to apply for a gross production tax rebate on wells that lose money over a years time. This provision has rarely cost the state more than 2 million a year in the 2 decades of its existence and has kept thousands of wells from being abandoned or even plugged. However, the estimate for 2015 is over 130 million; 83% of which is from applications for the state’s largest companies. These same companies are only paying a 2% rate on new wells; an “incentive” that is costing the state upwards of 400 million. Taken together they are “breaking the bank” and must either be repealed or temporarily suspended until our financial condition improves.
Our industry should lead but all tax credits should be eliminated or suspended before the state’s credit rating gets downgraded making a bad situation disastrous.”