Quantcast
Environmental News for a Healthier Planet and Life

Help Support EcoWatch

Ohio Should Raise Severance Tax on Shale Gas

Fracking

Policy Matters Ohio

If Ohio levied a severance tax on oil and gas at rates similar to neighboring states, it could generate up to $538 million in new revenues between now and 2015. These funds would help with the up-front, public costs of the anticipated drilling and lay the groundwork for a strengthened economic future. In a paper released on Dec. 19, Beyond the Boom: Ensuring adequate payment for mineral wealth extraction, Policy Matters Ohio recommends that the state raise its severance tax on oil and gas to 5 percent of value, equal to the rates in West Virginia and Michigan.

“Ohio’s severance tax is one of the lowest among states with potential to produce oil and gas from shale,” said Wendy Patton, author of the new report and senior project director at Policy Matters. “Part of preparation for the coming boom should include raising the severance tax rate to a level consistent with other energy states.”

States with significant reserves of natural shale gas include Texas, with a severance tax rate of 7.5 percent; Oklahoma, 7 percent, and Arkansas, Michigan and West Virginia, 5 percent. Louisiana has a rate on volume of gas produced of $.16 per thousand cubic feet (mcf). Pennsylvania currently has no severance tax, but is considering one.

Ohio’s rate on volume of gas produced is $.025 per mcf (with an additional $.005 for conservation). The effective severance tax rate on natural gas over the past decade has been less than half of 1 percent. The situation for oil is similar, with Ohio’s rate of $.10 per barrel, (with a matching conservation fee) at the low end among states with a severance tax on oil and an average effective severance tax rate over the past decade of less than one fifth of 1 percent of value.

States with high production of minerals use the severance tax to compensate for depletion of natural resources. The revenues strengthen and stabilize public services that build the economy of the future, including schools and higher education. The tax is deductible from federal taxes, which softens the impact on producers. Ohio ranks 25th in severance tax collections among the 35 states that collect such a tax, yet 19th in production of natural gas and 17th in oil production.

Horizontal drilling and hydrofracturing (‘fracking’) are expected to significantly boost drilling in Ohio. Fracking, which uses millions of gallons of water laced with chemicals and other additives, is exempt from the federal regulations, yet is suspected of pollution in watersheds and aquifers. Costs associated with increased drilling activity as well as with pollution may impact state and local finances, while the level of benefits predicted by the industry may not materialize. The so-called ‘natural resources curse’ of places rich in minerals but with low in per-capita income—from West Virginia and Louisiana to Nigeria—warns of trouble beyond the boom.

“Many mineral-rich states dedicate their severance tax collections to trust funds that finance services during drilling and strengthen the state once minerals are depleted,” said Patton. “The severance tax is how energy states ensure impacted communities are protected and wealth invested to create a better future for all residents.”

For more information and to read the full report, click here.
 

EcoWatch Daily Newsletter

Much of Eastern Oklahoma, including most of Tulsa, remains an Indian reservation, the Supreme Court ruled on Thursday. JustTulsa / CC BY 2.0

Much of Eastern Oklahoma, including most of Tulsa, remains an Indian reservation, the Supreme Court ruled on Thursday.

Read More Show Less
The Firefly Watch project is among the options for aspiring citizen scientists to join. Mike Lewinski / Wikimedia Commons / CC by 2.0

By Tiffany Means

Summer and fall are great seasons to enjoy the outdoors. But if you're already spending extra time outside because of the COVID-19 pandemic, you may be out of ideas on how to make fresh-air activities feel special. Here are a few suggestions to keep both adults and children entertained and educated in the months ahead, many of which can be done from the comfort of one's home or backyard.

Read More Show Less
People sit at the bar of a restaurant in Austin, Texas, on June 26, 2020. Texas Governor Greg Abbott ordered bars to be closed by noon on June 26 and for restaurants to be reduced to 50% occupancy. Coronavirus cases in Texas spiked after being one of the first states to begin reopening. SERGIO FLORES / AFP via Getty Images

The coronavirus may linger in the air in crowded indoor spaces, spreading from one person to the next, the World Health Organization acknowledged on Thursday, as The New York Times reported. The announcement came just days after 239 scientists wrote a letter urging the WHO to consider that the novel coronavirus is lingering in indoor spaces and infecting people, as EcoWatch reported.

Read More Show Less
A never-before-documented frog species has been discovered in the Peruvian highlands and named Phrynopus remotum. Germán Chávez

By Angela Nicoletti

The eastern slopes of the Andes Mountains in central Perú are among the most remote places in the world.

Read More Show Less
Left: Lemurs in Madagascar on March 30, 2017. Mathias Appel / Flickr. Right: A North Atlantic right whale mother and calf. National Marine Fisheries Service

A new analysis by scientists at the Swiss-based International Union for Conservation of Nature (IUCN) found that lemurs and the North Atlantic right whale are on the brink of extinction.

Read More Show Less
Nobody knows exactly how much vitamin D a person actually needs. However, vitamin D is becoming increasingly popular. Colin Dunn / Flickr / CC by 2.0

By Julia Vergin

It is undisputed that vitamin D plays a role everywhere in the body and performs important functions. A severe vitamin D deficiency, which can occur at a level of 12 nanograms per milliliter of blood or less, leads to severe and painful bone deformations known as rickets in infants and young children and osteomalacia in adults. Unfortunately, this is where the scientific consensus ends.

Read More Show Less

Trending

Data from a scientist measuring macroalgal communities in rocky shores in the Argentinean Patagonia would be added to the new system. Patricia Miloslavich / University of Delaware

Ocean scientists have been busy creating a global network to understand and measure changes in ocean life. The system will aggregate data from the oceans, climate and human activity to better inform sustainable marine management practices.

EcoWatch sat down with some of the scientists spearheading the collaboration to learn more.

Read More Show Less