Oil industry group’s cover highlights tax vote
Oklahoma’s oil and natural gas industry leaders this month lost a fight they’ve been waging for three years. But they’re not going down quietly.
The Oklahoma Independent Petroleum Association this week released its monthly Well Head-magazine with a large cover image showing the final vote for House Bill 1010. The headline for the cover story: “Good guys wear red,” referring to the 29 legislators who voted against the bill. The group also promoted the image on social media.
“We serve 2,000 members in the oil and gas industry, and HB1010 was a significant piece of legislature for our industry,” OIPA spokesman Cody Bannister said. “Not all of our members follow the day-to-day happenings at the Capitol, so we wanted to make sure they were aware the vote happened and who voted which way.”
HB 1010 funds the $6,000 annual teacher pay raise by boosting the initial gross production tax rate to 5 percent from 2 percent and raising the tax on gasoline, diesel and cigarettes. The bill passed 79-19 in the House and 36-10 in the Senate.
The bill is expected to raise $170 million from the gross production tax, $153 million from the cigarette tax and $105 million from the fuel tax, according to estimates from the Oklahoma Tax Commission.
Oil and natural gas industry leaders supported the unsuccessful Step Up Oklahoma plan, which would have boosted the initial gross production tax to 4 percent, while also including a tax on wind energy and larger increases to the gasoline and cigarette taxes.
“We have said all along that other industries have to be part of solving the revenue issue in order to move Oklahoma forward. It can’t be just the oil and gas industry.”
The new tax rates are scheduled to become effective in July.
Oil prices rise
While taxes are set to increase in Oklahoma, oil prices also gained ground this week.
Oil hit a 40-month high this week, with domestic benchmark West Texas Intermediate briefly reaching as high as $69.56 a barrel Wednesday before settling at $68.29 Thursday.
Wednesday’s price jump was sparked by a report from the U.S. Energy Information Administration that showed the country’s oil storage levels dropped by 1.1 million barrels last week, providing more indication that global supply and demand are nearly in balance for the first time in nearly four years.
Representatives of the Organization of Petroleum Exporting Countries are set to meet Friday and are expected to continue their effort to slow production. Reuters reported Thursday that Saudi Arabia wants global benchmark oil prices at more than $80 a barrel and would be comfortable with prices as high as $100 a barrel.
OPEC and Russia have limited their production targets formore than a year in effort to strengthen oil prices. The cartel often imposes quotas to affect prices, but member countries historically produce well more than promised.
This time, however, the group appears to be under producing. Bloomberg reported this week that OPEC in March recorded its fifth consecutive month of record high compliance rates. The rate jumped to 164 percent, up from 148 percent in February. The collapse of Venezuela’s oil industry contributed heavily to the overall OPEC drop, but Saudi Arabia also reported further cutbacks last month, according to the Bloomberg report.