Hagan Legislation Would Raise Shale Gas Taxes

Wednesday, February 29, 2012

COLUMBUS, Ohio -- State Reps. Robert Hagan, D-60 Youngstown, and Mike Foley, D-14 Cleveland, have introduced new tax legislation that they say would ensure that Ohioans receive a fair share of profits from natural gas drilling.

The proposal also would establish a permanent fund to ensure the local communities impacted by hydraulic fracturing, or fracking, will have a continued source of sustainable financial resources once the wells have dried up, the lawmakers said. The legislation would raise Ohio’s severance tax on high cost recovery gas wells to 7%, with 1.5% going to establish the protection fund, and 0.5% going into a reestablished advanced energy fund.

“To say that we, as a state, are doing enough to ensure financial fairness in natural gas extraction is a flat out lie at this point,” Hagan said. “If [Gov. John Kasich] wants to dance around the issue and say maybe there needs to be some fees, I would say he’s less than half the way there. We have to remember something. This shale oil and gas is owned collectively. It’s not owned by the governor or the oil and gas association. The people of Ohio own it, and this publicly held resource is being exploited for enormous profit by private companies. Ohioans need to retain their fare share of the proceeds to ensure long term sustainability for their families and communities. What we’re asking for is a pittance.”

The severance tax on natural gas is currently charged at 3 cents per thousand cubic feet, the lowest of all states that have a severance tax on shale gas development, according to the lawmakers. The new proposal would change the tax to a percentage of the market value, which is in line with most fracking states.

“Gas companies will be making billions off of Ohio’s natural resources,” Foley said. “Ohioans need a fair shake, and a place to turn when those natural resources are gone. This bill would not only give impacted communities funding to repair roads and bridges used by heavy fracking trucks, but also jump-start a new energy industry to offset the used natural gas.”

Published by The Business Journal, Youngstown, Ohio.