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Oil and natural gas companies ask Oklahoma legislators to raise taxes

OKLAHOMA CITY - Joe Warren is a partner of Cimarron Production Company, Inc, a small oil and natural gas company.

He has banded together with a group of other small producers to form a new group, The Oklahoma Energy Producers Alliance.

One of their main goals is to get the legislature to raise their taxes.

“The tax breaks that we got a few years ago just went too far. And, they’re not serving the interests of the state,” Warren said.

In 2014, the legislature passed a law that lowered the gross production tax on wells for the first three years from 7 percent to 2 percent.

Some smaller producers want it to go back up to the 7 percent.

“We think it would help the state at a time when it needs it desperately and it would be good for everyone,” Warren said.

But, not everyone agrees.

The Oklahoma Independent Petroleum Association represents more than 2,500 individuals and companies from Oklahoma’s oil and gas industry.

One of their main objectives this legislative session is to keep the 2 percent tax rate.

“Why would you want to go raise taxes on an industry that already pays 25 percent of all the taxes paid in this state? And, so, we think we’re doing our fair share to support schools,” said OIPA Executive Vice President of Governmental Affairs Tim Wigley.

Wigley said the state should not cripple the oil and gas industry at a time when they’re poised to come back from a downturn.

And, he said the smaller companies pushing for this won't be hurt as much as many larger ones.

“Some of those small producers, small vertical historic producers, some aren’t drilling any more. So, yes, it’s easy to say I’ll take a 7 percent tax when I’m not drilling,” Wigley said.

The Oklahoma Oil and Gas Association agrees.

“It’s disappointing to see well-respected Oklahomans use such misleading arguments to push for job-killing tax increases,” said Chad Warmington, president of OKOGA. “Those who formed OEPA are not drilling new wells, making new and significant capital investments in the state, or creating new jobs. In other words, they are not currently participating in the type of activity that will lead our state out of two years of a struggling economy. OKOGA member companies have largely contributed to the 2,800 jobs the energy sector created in Oklahoma in January and February. We are supporting policies at the state capitol that will allow this type of growth to continue so that we can close the budget gap and continue to be the top revenue stream for education, roads, and critical services in Oklahoma. For an industry that pays four times as much in taxes per employee as other Oklahoma industries, another tax hike on the state’s number one job creator is not the solution.”

The Oklahoma Energy Producers Alliance is holding a rally at the state capitol on Wednesday to ask lawmakers to raise the tax to 7 percent.