Kasich should reconsider severance taxes because of low oil prices, trade group says
Posted January 29, 2015 in Selected Press
The oil and gas industry's top trade group hopes the recent downturn in prices and activity spurs Ohio Gov. John Kasich to lessen his severance tax proposal.
Kasich is expected to unveil his budget plan next week, and might give an idea of what his severance tax plan is at a conference this afternoon.
Legislators and the governor couldn't agree last session on a compromise – the industry was OK with 2.5 percent, but Kasich said that was too lenient.
Oil and gas prices have fallen precipitously since then, causing some drillers in eastern Ohio to pull back investment for at least 2015.
That means, says the American Petroleum Institute, that the governor should relent.
"The notion that some of these officials want to raise taxes on the industry doesn't make sense," said API chief economist John Felmy.
API and the state-focused Ohio Oil and Gas Association always have said high severance taxes could cause drillers here to move elsewhere. But low prices, they say, have bolstered their arguments.
"Anytime you have a lower price regime you have a lot of projects that become uneconomical," Felmy said.
Menawhile, Policy Matters Ohio said in a report issued Thursday that eastern Ohio communities that are impacted by the huge increase in traffic should get a chunk of the severance tax, and that Ohio needs a higher tax than the 2.5 percent proposal.
"Legislation with rates up to 7.5 percent on oil and gas have been proposed," the left-leaning think thank says. "Rates in major producing states are much higher, although the costs to communities in some rural, western producing states are lower."
The main lobbyist behind the push for a lower severance tax, Tom Stewart of the Ohio Oil and Gas Association, recently retired because, he says, the politics around the fight got too personal.
Original Article: http://www.bizjournals.com/columbus/news/2015/01/2...