Updates
April 3, 2013: ND legislature looking at stripper well loophole:
To encourage investment in oil development, the Legislature many years ago exempted stripper wells — those producing less than 30 barrels of oil a day — from the state extraction tax.
However, the exemption applies to an entire production spacing unit, and since the boom, some high-producing Bakken wells in the same unit that has a stripper well have escaped the extraction tax.
For at least two sessions, legislators have talked about closing the loophole, and this year Cook included stripper well changes as part of a comprehensive oil tax reform bill. It was killed in the House, largely due to a controversial plan to lower the oil extraction tax.
By combining the stripper well changes with oil tax changes, he was able to make the bill “revenue neutral.”
Original Post
Very, very good article; a must read.
Based on that article it appears the burden on oil companies is far greater in ND than TX. ND has a long way to go to reach production levels of Texas but the two states are not that far apart in tax revenue from oil production.
ReplyDeleteHope ND takes notice of that as oil prices continue to slide downward and companies have to become more selective with their budgets.
You are absolutely correct. And I blogged about that quite awhile ago (taxing oil companies). Great Britain certainly found out how the hard way what happens when increasing taxes on oil companies.
DeleteSomeone has pointed out that some of the Bakken-centric companies are not only Bakken-centric but Bakken-only, with no acreage outside the Bakken. They are pretty much trapped for the moment.
Lets see the state of North Dakota will have a 2 billion surplus at the end of June 30, 2013. This after dramatically increasing outlays the last two years. Cries of tax reduction abound and they should.
ReplyDeleteRather than eliminating the property taxes completely like was proposed and turned down use the South Dakota model instead of no income tax or corporate tax. Also reduce the tax on oil depletion from over 11% to be competitive with other oil producing states.
Governments by nature exist to spend other peoples money. Keep a very short leash on it. Some outlays are absolutely necessary but make it justify why it is necessary. All to often it is frivolous nonsense.
Frivolous nonsense is bad enough, but it really sounds like the state employees were seeing their benefits raised over the years without much voter input. When I look at states in trouble, it seems the phrase "pension funds" is in the opening paragraph as often as not.
DeleteSpeaking of pensions. I saw the same thing in the military, from which I draw a pension. We were often paid less than comparable private sector jobs (based on surveys; I question the accuracy of some of them but be that as it may). Less pay relative to our civilian counterparts (especially among the professionals and "CEOs" [commanders], for example), the reasoning was a) our jobs were pretty secure (though dangerous); b) "free" health care; and, c) pension. By moving the costs to the right (less pay now; pensions later), the military was able to push "real" costs to the "out years." Those "out years" are now here, and at the federal level, not much has been done to change the benefits. However, interestingly, because inflation has been so low, pensions have seen no lost-of-living adjustment for several years now.
DeleteNo cost-of-living adjustments hurt in the short run, but they also accumulate (negatively) going forward. The difference between federal pensions and state pensions: the states cannot print their own money.