by Nelson Cole
As argued in the article written by Western Priorities, raising taxes on oil and gas companies can provide amazing benefits for the American people. Already tax revenue from oil and gas companies is the United States second largest source of tax revenue behind the IRS. (Western Alliance) However, we should increase that revenue because of our soaring national debt.
The Obama administration, since 2011, has pushed to raise taxes on major oil and gas companies drilling on public land. The current pricing standards ignore decades of inflation, not to mention environmental and health cost created from fossil fuel production (Washington Post). The royalty rate for oil and gas has remained at 12.5% since 1920, but in the last two decades the price of oil has tripled while the price for leases has remained the same. Many western states charge above this for the state fare, including Texas which charges 25%. While companies prosper from the tax breaks the public has been left to pay for private companies gains through road damage and respiratory problems. The royalty rate set in 1920 did not account for many of the issues that occur on public land today (Washington Post).
An article provided by Western Energy Alliance tries to assert that oil companies do pay their fair share, pointing out that the U.S government has collected nearly 2 trillion dollars from companies since 1981. The article also focuses on the numerous local communities that have benefited already from the large amount of tax revenue from oil companies.
The real question then is whether removing tax cuts will affect the oil price. Data shows it is only technology, geology and the value of oil and gas resources themselves that are determining factors for profit. Varying tax differences between each state do not affect oil and gas production. For example, Wyoming has the highest effective tax rate but still leads the nation in production. Another example includes North Dakota, a state that is booming in production despite higher taxes than states bordering it such as Montana. Montana earns less revenue for its state and the advantage does nothing to help with production costs (Western Priorities).
Western Energy Alliance