Ohio Governor John Kasich is facing stiff opposition on several fronts in his call to increase oil and gas drilling taxes in order to pay for an income tax cut for Ohioans.”The point is for out–of- state oil companies to pay more and all Ohioans to pay less” Kasich said at the State House.
Ohio has opened her arms wide to welcome the oil and gas companies seeking access to the states vast shell oil and gas beneath Eastern Ohio. Those companies are using controversial drilling processes called Horizontal Fracturing or Fracking for short.
Governor Kasich said he just want to be sure that Ohioans overall reap some of the benefits which are flowing to the oil and gas companies. The Governor states “it’s just a matter of time, rather than if it’s going to happen.” The Governor’s plan is to reduce income tax to Ohioans. However, he is facing opposition from Republicans, Democrats, Business and Environmentalists, all objecting for different reasons. Some say the tax is unfair to businesses, while others say the income tax cut on the back end is too small a matter. Campaign Finance Reports filed with the state show that five of the major Oil and Gas Industries Political Action Committees paid close to $600,000 to Ohio Politicians since 2010. This includes almost $100,000 from Chesapeake Energy, the biggest oil industry player in the State.
Tom Stewart, the Executive Vice President of the Oil and Gas Association, has stated that the higher taxes might make some oil and gas companies reconsider doing business in Ohio. The Governor is having none of that, saying that they have seen no drop in the enthusiasm from the companies wanting to drill in Ohio.
Under the Governor’s Proposal, Ohio would continue to charge companies 20 cents a barrel for oil retrieved through conventional wells. However, oil obtained through fracking would be taxed at 1.5% of the annual gross sales for companies in the first year of operation. After that, the tax would grow to 4% of gross sales.
Natural gas tax rates would also change. Companies that produce less than 10,000, cubic feet of natural gas per day, through traditional wells (about 90% of Ohio’s natural gas produces) will no longer pay a tax. Those producing more than 10,000 cubic feet of natural gas per day will pay a 1% tax, down from a current rate of 3%. Natural gas collected through fracking would be taxed at 1% regardless of the amount collected. The new tax on natural gas liquids obtained from fracking would be the same tax rate as that charged for oil from fracking (1.5% of gross sales in year one and 4% thereafter).