Oklahoma lawmakers are considering re-evaluating the value of tax incentives for oil and gas drilling, which totaled $321 million last fiscal year and helped smother state revenue growth, Secretary of Finance and Revenue Preston Doerflinger says.
The oil and gas industry defends the tax credits, refunds and rebates. They’re not tax breaks, they’re “capital investment” in the state’s largest jobs engine, Oklahoma Independent Petroleum Association President Mike Terry says.
But Ken Levit, executive director of the George Kaiser Family Foundation — “a philanthropic organization built from the largesse of the oil and gas business in Oklahoma,” he writes — wrote an interesting Oklahoman editorial on nixing the incentives.
In this instance, the special rate of 1 percent has nothing to do with the enormous amount of horizontal drilling taking place in Oklahoma. The market opportunity dictates the drilling. The same activity is taxed at roughly 11.5 percent in North Dakota. Guess what? They’re drilling like mad in North Dakota! If the gross production tax returns to its historic rate of 7 percent in Oklahoma, producers will still be drilling the same wells because the free market makes it worth it.