With a Democratic administration that has remained steadfast in its commitment to green energy set to take office in Washington, the uneasiness among oil and gas industry executives and employees alike is palpable across the state.
The industry is inextricably linked to the health of Texas’ counties and school districts thanks to the tax dollars it generates.
The Texas Oil & Gas Association (TXOGA), a statewide trade association, highlighted the impact the industry makes on the state in its Annual Energy & Economic Impact Report that was released Jan. 11.
The association’s report, which was shared by the TXOGA President Todd Staples during a media briefing, shows that industry members paid nearly $14 billion in taxes and state royalties during fiscal year 2020.
“Even in an extremely difficult year,” Staples said, “the Texas oil and natural gas industry continues to contribute tremendously to state and local tax coffers, while fortifying our energy security and leading the way in innovation and investment that is advancing environmental progress.”
“The ongoing recovery of the oil and natural gas industry is essential to the state’s continuing economic improvement.”
The report showed that Texas school districts received more than $2 billion in property taxes from mineral properties producing oil and natural gas, pipelines and gas utilities, while counties across Texas received $688.4 million in property taxes.
Three school districts – Pecos-Barstow-Toyah, Midland and Wink-Loving – received more than $100 million in tax payouts. An additional four districts, including Karnes City, received at least $50 million in tax payments.
The $60.3 million received by Karnes City ISD, according to the report, represents 90.4 percent of the tax base for the district.
Bee County’s four school districts – Beeville, Skidmore-Tynan, Pettus and Pawnee – received about $5.1 million in tax payouts.
Pawnee received the most with $2.4 million (55.5 percent of total tax bases), while Pettus received $1.2 million (14.5 percent). Beeville received about $800,000 (8.7 percent) and Skidmore-Tynan received about $700,000 (28.6 percent).
Bee County received a total of $1.9 million, which represents 17.3 percent of the county’s total tax base.
Reeves County was the top beneficiary from property taxes according to the report, receiving $74.5 million, which equates to 84.4 percent of its tax base.
School districts in the Eagle Ford Shale area, which covers a large swath of South Texas, received $520.6 million, while counties in the area received $170.6 million.
“As a former county judge myself, I’ve seen firsthand how much of an impact oil and natural gas tax revenue has for our communities in South Texas,” said former Bee County Judge Stephanie Moreno, who is now the executive director of the South Texas Energy & Economic Roundtable.
“We are fortunate to have such abundant natural resources in our region and the jobs, investment and local revenue that come with them.”
Tax dollars from the industry, Staples explained during his briefing, is used to support education, transportation, health care and infrastructure though the Economic Stabilization Fund (commonly known as the Rainy Day Fund), the Permanent School Fund (PSF) and the Permanent University Fund (PUF) – all of which are funded almost exclusively with taxes and state royalties paid by the oil and natural gas industry.
In 2020, 99 percent of the state’s oil and natural gas royalties were deposited into the PSF and the PUF, which support Texas public education. The PUF received $771 million and the PSF received $942 million. The Rainy Day Fund received $1.657 billion from oil and natural gas taxes.
In addition to its economic impact, Staples noted that the oil and natural gas industry has taken the lead in developing environmental solutions that are working to reduce emissions and flaring.
“The oil and natural gas industry is the nation’s leading investor in emission-reducing technologies, and as a result, Americans are breathing the cleanest air in decades, the U.S. leads the world in reducing energy-related carbon dioxide emissions and methane emissions from oil and natural gas systems are down 23 percent since 1990,” he said.
According to data from Railroad Commission of Texas, the percentage of natural gas flared out of all the natural gas produced in Texas decreased 80 percent between June 2019 and May 2020. In August, the Commission announced that less than one half of one percent of the natural gas produced in Texas was flared or vented, as of May 2020. 99.5 percent of natural gas produced went to beneficial use.
“All this, while the United States enjoys more energy security than ever before, and American-made energy is powering economic prosperity and environmental improvements around the world,” said Staples. “This progress – and ways to build on it – must be part of more rational discussions about the future of our energy, the environment and the economy.”
Staples also detailed a three-part policy he called the association’s Roadmap to Recovery that will “drive greater investment in all aspects of the oil and natural gas industry that will power Texas’ economic recovery and provide critical state and local tax revenue every Texan needs.”
First, TXOGA is urging lawmakers to ensure continued, responsible development of the essential energy infrastructure that is needed to meet the demands of our booming population.
Staples said the Legislature should also embrace smart tax policy such as renewing the economic development program known as Chapter 313, which attracts investments and jobs to Texas, and resisting calls to increase severance taxes on an industry that pays 6.3 times more in taxes on a per job basis than the average of the rest of the private sector.
Finally, TXOGA is urging lawmakers to maintain their commitment to science-based policy and rational discussions related to environmental issues, with the leading oil and natural gas innovators at the table.