Texas joins other energy states to see a hefty decline in mineral severance taxes, according to the EIA.
Related: Eagle Ford Shale Year in Review 2015
The Energy Information Administration released a report yesterday that showed the tax consequences of the months of falling crude prices. States assess severance taxes on companies that remove nonrenewable resources like crude oil, natural gas, and coal and when less is taken from the ground, there is less to tax.
The comptroller of Texas reports that as of November 2015, revenues from the oil and gas industry have declined significantly over the previous year. These decreases include:
- Natural gas production tax -48.14%
- Oil production tax -48.91%
The good news is that the Texas economy is more diversified than it has been during previous downturns. This means that severance taxes make up a lower percent the total state tax receipts (11% in 2014), so there will likely not be a need to make drastic changes to the 2016 budget.
Other states that are feeling the pinch include Alaska, North Dakota, Oklahoma, West Virginia and Wyoming. These states get most of their tax revenues from their energy sectors with severance taxes ranging from 40% to even as high as 75% of a state’s overall tax receipts.
Read more at texastransparency.org