State policy leaders should focus targeted tax relief on Oklahoma's ailing energy industry before considering Governor Keating's omnibus initiative to slash a variety of different taxes, according to the chairman of the Senate Energy, Environmental Resources and Regulatory Affairs.
"Before we consider an irresponsible, election-year tax cut program, we should try to do something that will have a real impact on Oklahoma's economy. Instead of throwing money at ineffective tax policies, let's do something to save an industry that creates jobs and revenues for Oklahoma," said Senator Kevin Easley.
The lawmaker is proposing a series of incentives to preserve jobs in the oil industry, most notably the suspension of the gross production tax when the price of oil dips below $15 per barrel.
"Some kind of safety net has to be in place to save the jobs and revenue tied to the thousands of wells that are just barely squeezing out an existence. Suspension of the gross production tax will keep them pumping and preserve their place in the Oklahoma economy," said Senator Easley.
The key components of the package include:
"These changes will help shore up an industry that still provides almost $2 million a day to the state treasury in gross production, sales, income and other taxes. This is a great investment for our economy," said Senator Easley.
The plan was met with enthusiastic support by the state's largest energy group. Jim Palm, president of the 1,400 member Oklahoma Independent Petroleum Association (OIPA), said Senator Easley and his legislative colleagues "continue to lead the nation in their vision on energy policy.
"Over the past several years, the Oklahoma Legislature has put in place the nation's most aggressive set of oil and gas-related tax incentives. Today, with oil prices near $13 a barrel, those incentives especially the law that provides gross production tax relief to any unprofitable oil-producing property are more important than ever," said Palm.
"Senator Easley's legislation is another vital component in preserving Oklahoma's natural resource asset base and continuing to attract investment capital into our largest industry."
Senator Easley said he expects bipartisan support for the measure, noting past efforts to help the energy industry have garnered similar backing. The bill would provide both immediate and long-term relief to an industry that has seen its product prices sliced in half during the past few months.
"It will be an immediate boost to producers who are reeling from the latest price drop and will serve as a long-range insurance policy to protect against future price declines. This initiative will save the state thousands of jobs and millions of dollars," said Senator Easley.