The following first appeared in the Houston Chronicle on February 18, 2016.
Staples: Oil tax plan threatens to destabilize industry
Texas economy also threatened by impact as Obama administration’s overreach would cut state revenue
It is a tumultuous time in the global energy marketplace, and the trouble isn’t limited to the price of oil. On top of tumbling oil prices, Texans are fending off assaults from Washington, D.C., that directly threaten our nation’s energy security and 400,000-plus Texas oil and natural gas jobs.
Last week, President Barack Obama proposed a $10 per barrel tax on oil, a proposal that adds insult to injury. Such a tax would discourage if not derail oil production in the United States just as our nation’s energy security gains sturdy footing.
The Environmental Protection Agency has repeatedly called for overreaching regulations that are out of touch with Texas’ strong track record for protecting the environment and reducing air emissions, even as production has skyrocketed. Last week, the U.S. Supreme Court halted implementation of the EPA’s Clean Power Plan while the lower court decides if the plan’s dramatic expansion of EPA authority is legal. Still others have petitioned the EPA to strip Texas’ authority to oversee important environmental regulations and to hand that authority to the federal government.
The maneuvers threaten our state’s economy, where the oil and natural gas industry is an anchor in terms of jobs, economic activity and state and local tax revenue, even in challenging times.
In fiscal year 2015, Texas’ oil and natural gas industry paid $13.8 billion in state and local taxes and state royalties – the second-highest such collection from the oil and natural industry in Texas history.
In addition to state revenue, Texas independent school districts and counties benefit from property tax revenue from oil and natural gas producing properties. In fiscal year 2015, Texas ISDs received $1.9 billion in oil and natural gas mineral property taxes. Counties received $632 million in oil and natural gas mineral property taxes.
All Texans benefit from oil and natural gas tax and royalty revenue, whether they live in an energy-producing area or not. Every year, oil and natural gas companies contribute billions of dollars in taxes and royalties that directly fund our roads, schools, first responders and essential public services.
Using tax revenue from the oil and natural gas industry, Texas has been able to invest billions of dollars in infrastructure like water projects and our State Highway Fund, as well as local investments in school construction. Texans see the impact of these investments every day.
Our Permanent School Fund, which supports Texas public schools, receives more than a half billion dollars annually from oil and natural gas royalties and leases. That fund, worth $34.5 billion, is the second-largest education endowment in the nation.
Falling oil prices remind us that this revenue isn’t guaranteed. In the current fiscal year, we’re seeing significantly less money available for state and local tax coffers.
Yet there is good news. Even with the downturn, several sectors of oil and natural gas industry remain steady, and our nation’s dependence on imported petroleum is at a 30-year low.
In 2014, net imports of crude oil and petroleum products consumed in the United States fell to 27 percent, the lowest level since 1985.
Texas is indeed the nation’s No. 1 producer of oil and natural gas, and also has the largest pipeline infrastructure in the nation. Thanks in large part to pipeline infrastructure, the U.S. has expanded its natural gas exports and is predicted to be a net exporter of natural gas by mid-2017 – which hasn’t happened since 1955.
Texas refineries account for 29 percent of total U.S. refining capacity, with the nation’s two largest refineries located here. Texas ports are shipping LNG, crude oil and refined products all over the world and bringing those dollars to Texas.
All of these “best of” accolades spell opportunity and jobs for Texans. But today’s market conditions remind us we can’t take the economic contribution of the Texas oil and natural gas industry for granted.
While the price of oil is understandably top of mind for many Texans, politicians and bureaucrats in Washington, D.C., have made it clear that the threat to our energy security and our economic prosperity is not confined to the price of the barrel. Regulatory actions that undermine the industry’s stability are not good for Texas.
Staples is president of the Texas Oil & Gas Association.