The state’s comptroller Glenn Hegar recently revised his estimate of revenue available to the state. The comptroller is essentially the chief financial officer of the state.
So, why does the revenue estimate matter to Texans?
State revenue pays for infrastructure and services that touch the lives of every Texan including our schools, our roads, Medicaid, child protective services, funding for first responders, police and firefighters, and much more.
It wasn’t surprising for those of us who work in the state’s oil and natural gas sector to hear the comptroller cite declining oil prices as a key reason for lower than expected state revenues. As oil prices have dropped, oil production activity is slowing down, which has a ripple effect across the economy.
From exploration and production to pipelines and refineries, the Texas oil and natural gas industry contributes mightily to the state’s economy and its tax coffers. Oil and natural gas companies paid a record-breaking $15.7 billion in state and local taxes and royalties in 2014 alone. In 2012, when daily oil production was a million barrels less a day than in 2014, the oil and natural gas industry still paid $12.1 billion in state and local taxes and royalties.
So despite decreased oil prices, Texas oil and natural gas remains an integral part of our larger economy. Hundreds of thousands of Texans are directly employed by the industry and every oil and natural gas job generates many additional jobs in other sectors of our economy. In all, roughly two million Texans have their jobs because of oil and gas activity in the Lone Star State.
With so much at stake for Texas, no matter the price of oil, we should continuously take stock to ensure that the state’s regulatory policies are working to encourage safe operations and continued investment in this key segment of the state’s economy.
Energy producing nations from around the world look to Texas to see how our state’s policies protect the environment while allowing oil and natural gas activity to grow jobs and bolster our energy security. Texas is getting it right when it comes to regulation of the oil and natural gas sector and the world is watching.
Texas oil and natural gas companies support robust, science-based regulations to protect the environment and to keep workers and communities safe. The oil and natural gas industry also supports a fully funded state regulatory agency with field inspectors to thoroughly enforce all rules and regulations. Some people don’t realize that the oil and natural gas industry is one of the most regulated industries in the state, as it should be.
The oil and natural gas industry also supports new and enhanced rules that regulators wisely consider as technology evolves. For example, the oil and natural gas industry supported enhanced well integrity regulations that strengthened requirements related to drilling, cementing and completing wells. Oil and gas operators and environmental groups alike applauded the state’s efforts to enhance well integrity requirements.
Likewise, the oil and natural gas industry praised state regulators when they adopted rules to encourage water recycling in oil and gas operations as well as amended rules related to disposal well operations in areas with historical seismic activity. These are examples of science-based regulations and represent smart policy.
Credible research shows that vigorous and extensive regulations like these are working to protect the environment.
Recently, Yale University and the Environmental Protection Agency released research that showed that fracking has not led to widespread contamination of drinking water. Comprehensive research, based on millions of air samples, shows that air near Texas oil and natural gas facilities is safe. And, a study from The University of Texas concluded that methane emissions from oil and natural gas production have declined in recent years, even as production skyrocketed.
A well-regulated oil and natural gas industry benefits every Texan. Science-based regulations and a commitment to responsible oil and natural gas operations are protecting our environment and fueling our economy, even during challenging economic times.
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Todd Staples is president of the Texas Oil & Gas Association (TXOGA).
Read this column in the Rio Grande Guardian.