The recent debate on tax provisions for Oklahoma's oil and natural gas industry has put the state's petroleum producers in a familiar spot — in the cross hairs. The industry is no stranger to being a target by those who want to increase government spending. President Barack Obama has called for an increase in taxes on the industry each year he's been in office. Now, unfortunately, some people in my home state are joining the chorus.
There is competition every day to keep drilling dollars here in Oklahoma. Maintaining a competitive business climate is essential; we must have a tax structure in place that encourages the increased development of oil and natural gas.
Oklahoma's current tax structure encourages growing and thriving Oklahoma businesses both big and small to actively explore for oil and gas in the Sooner State, putting Oklahomans to work and generating more than one-quarter of the state's tax revenue.
The gross production tax, personal income taxes and sales taxes paid by the oil and natural gas industry account for 27 percent of all taxes paid in the state. This number increases when you include motor vehicle taxes, income tax on royalty payments, ad valorem taxes and the litany of other miscellaneous taxes and fees paid by oil and natural gas producers and the service companies that support them.
And those tax receipts are growing. State Treasurer Ken Miller recently reported gross production tax collections have exceeded prior month collections for four consecutive months. In August, gross production receipts exceed the prior year's numbers by more than 40 percent.
Oil and natural gas producers must take a state's entire business climate into consideration when deciding where to drill their wells. To take one component (in this case, the tax rate for horizontal wells) of a complicated formula out for comparison doesn't provide an accurate picture of each state's business environment.
In 2012, the Fraser Institute named Oklahoma the No. 1 place in the world for investment in oil and natural gas, citing a sensible and competitive tax, regulatory and labor environment. It's a ranking our state should be proud of and work to maintain because a healthy and vibrant oil and natural gas industry benefits every corner of this great state.
Oklahoma has no greater job creator than the oil and gas industry. Unemployment rates are down in 76 of Oklahoma's 77 counties; the state's traditional oil and gas hubs such as Enid and Ardmore boast some of the lowest unemployment rates in the state. The counties that cover the Mississippi Lime formation in northern Oklahoma and the South Central Oklahoma Oil Province all have reported unemployment rates of less than 4 percent.
Working Oklahomans work in the oil field. Welders in Waukomis, landmen in Lindsay and roughnecks in Ripley all benefit from a tax structure designed to draw investment into Oklahoma's historic oil and natural gas fields.
Terry is president of the Oklahoma Independent Petroleum Association, representing more than 2,500 individuals and companies from Oklahoma's oil and natural gas industry.