The EIA have reported that the decline in spot oil prices in the last half of 2014 and the first month of this year has reduced oil and natural gas production tax revenues in some of the largest oil and natural gas producing states. Texas, North Dakota, Alaska and Oklahoma are four of the top five US oil and natural gas producing states and they derive a significant share of their unrestricted operating revenues from taxes on oil and natural gas production. California does produce more oil than both Alaska and Oklahoma, but its economy is much larger, making it relatively less affected by changes in oil and natural gas prices and production.
In August last year, Texas collected US$583 million in tax receipts from oil and natural gas production, however tax revenue declined by 40% to US$352 million in January this year, based on data from the state’s comptroller. The EIA has estimated that crude oil and lease condensate production in the state also increased in December 2014, growing from 88 million bbls to 107 million bbls from January – December 2014.
Tax revenue in North Dakota from oil and natural gas production dropped from US$323 million in August last year to US$254 million in January 2015, a 21% reduction. Monthly production has continued to increase through December even as prices declined, according to the latest production data.
The EIA reports that Alaska relies on revenue from crude oil production for 90% of its operating budget. The state’s 2015 revenue projections assumed oil prices at US$105/bbl. According to initial oil and natural gas production tax receipts received by the Alaska Tax Accounting System, monthly oil and gas production tax production revenue in August 2014 was US$108 million. In January this year, revenue from these taxes was US$26 million. The oil and natural gas production tax represents one of the four primary components of petroleum revenue in the state, with the others being corporate income taxes, property taxes, and royalties collected by the Alaska Permanent Fund Corporation.
The state collected US$62 million in funds from production oil and natural gas taxes in August last year. This value declined to US$43 million in January 2015, a drop of 30%, based on information from the Oklahoma Tax Commission. Oklahoma’s production was relatively flat during this period.
Edited from press release by Claira Lloyd
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