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Published: Sunday, 12/22/2013


Severance tax plan will help Ohio

Your Dec. 12 editorial “Tax the fracks” portrayed the severance tax increase proposed in an Ohio House bill to be less sensible than previous discussions before the General Assembly.

Your editorial noted that the House bill would increase funding for the state’s regulatory program, for the geological survey, and for plugging idle wells from historical production, which is an important environmental concern. All are worthy ventures that relate to the original intent of the severance tax — to finance the state’s regulatory program.

Your editorial neglected to mention that Ohio’s severance tax rate was doubled just three years ago with the support of the industry, not 30 years ago as you stated.

You also stated that oil and gas producers do not pay taxes on valuable natural-gas liquids, such as propane, ethane, and butane. The fact is that every molecule severed and sold from a well is taxed in Ohio, with the rate determined by whether the compound is in a gaseous or liquid state.

Most important, the editorial misses the mark in criticizing “unwarranted new tax credits to well owners,” claiming that they would do nothing to help Ohio taxpayers. Ohio’s royalty owners will get an offset to their personal income tax.

The industry’s knowledge about the shale play continues to evolve, as we now know the Utica Shale is predominantly a natural-gas play. The projected revenue raised under the House bill would be $1.7 billion.

As the House bill is debated, we in the industry are confident that lawmakers and the public will come to view the bill as sensible tax reform that will allow all of Ohio to benefit.


Executive Vice President Ohio Oil and Gas Association Columbus

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