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Columbus
Dispatch
Support
the fracking tax
Severance-tax plan would
help all without harming competitiveness
Wednesday March 13, 2013
For
all the work Ohio
leaders are doing to attract economic development to the state, one of
the
biggest opportunities for job creation already is here, underfoot.
Members
of the legislature
should work with Gov. John Kasich to implement a reasonable and fair
tax on oil
and natural-gas extraction to help ensure that development of the
state’s
natural resources benefits all Ohioans rather than simply enriching
out-of-state drillers.
New
technology now allows
the extraction of oil and gas from the state’s vast shale deposits, and
the
drilling boom has just begun. Across the country, the process of
hydraulic
fracturing, aka fracking, has created booms in formerly moribund areas
in North
Dakota and other states.
Domestic
oil production has
reached its highest level in 20 years, and the cost of natural gas is
at its
lowest level in decades.
Drilling
in Ohio’s
shale-gas deposits already has created an estimated 2,400 to 2,600
jobs,
according to Mark Partridge, a professor and researcher at Ohio State
University and managing editor of the Journal of Regional Science.
Though he
thinks industry-backed estimates of some 200,000 new jobs in Ohio are
too
aggressive, he believes 20,000 is a reasonable number to expect within
the next
three years, as more wells come online and new transportation and
support
services develop around the business.
For
example, two companies
have just announced a joint venture to build a pipeline linking Ohio’s
Utica
and Marcellus shale regions via pipeline to processing and storage
facilities
in Louisiana. Meanwhile, Crosstex Energy is partnering with another
company to
invest $50 million in building two compressor-station facilities in
eastern
Ohio that will move shale oil and gas to chemical plants and other
customers.
The
fact that
private-sector companies are going forward with multi-million- dollar
investments shows that they’re confident there is money to be made
regardless
of whether Ohio passes the modest severance taxes that Kasich seeks.
Under the
governor’s plan, high-volume drillers using fracking technology would
pay
severance taxes of about 4 percent of sales after drillers recoup their
upfront
costs; until then, the tax would start at 1.5 percent and grow
gradually. Dry
natural gas would be taxed at just 1 percent of sales.
Read
the rest of the article at the Columbus
Dispatch
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