SGovernment budgets share in the healthy profits of the oil and gas industry, raking in immense and in some cases record-breaking revenues from production.
Tax data from energy-producing states shows that the same commodity market boom that has propelled energy sector profits to new heights since the start of the war in Ukraine is also flooding states with cash.
GAS-FRIENDLY MESSAGE HELPED DEMOCRAT JOSH SHAPIRO WIN IN PENNSYLVANIA
Texas, the nation’s largest oil and natural gas producer, levies taxes at a fixed rate on the market value of each commodity. That means revenue increases when oil and gas prices rise, and prices have been elevated all year.
The state collected $6.36 billion in tax revenue from oil exploration in fiscal 2022, up 84.4% from the prior year. Gas production revenue increased 185% to $4.47 billion. Combined oil and gas revenues for the year surpassed $10 billion for the first time ever.
The high rallies continue even as crude prices have fallen from above $100 a barrel that lasted throughout the spring and summer.
The Texas oil exploration tax brought in $544 million in October, while the natural gas exploration tax brought in $410 million. According to figures from State Comptroller Glenn Hegar, revenue increased last month by 33% and 59% compared to October 2021.
In New Mexico, which shares the prolific Permian Basin with Texas and also earns royalties from production on federal and state properties within its borders, oil and gas revenues generated between January and April this year surged to more than $1.7 billion U.S. dollar.
Revenue for the same period last year was just over $782 million.
A dollar-per-barrel increase in the price of oil translates to about $21 million for the New Mexico general fund, according to an introduction released by the state’s Legislative Finance Committee, while a 10-cent increase in the price per thousand cubic feet of natural gas translates to additional revenue of $15 million.
For reference, the global benchmark averaged $70.89 per barrel in 2021 and is expected to average $102 per barrel in 2022, according to the Energy Information Administration.
Smaller producers also benefit from the windfall. In October, Montana reported second-quarter state oil and gas exploration tax revenue that was almost double that of the second quarter of 2021.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Oil and gas companies, particularly the largest among them, have come under scrutiny from President Joe Biden and other Democratic politicians for reporting consecutive quarters of rising revenue as consumers pay more for gasoline and other products.
Biden recently threatened to impose a windfall tax on the sector if they stop reinvesting their profits to increase production and add refining capacity. He accused them of unethically profiting from the war in Ukraine, which disrupted energy markets.
The industry has denied Biden’s allegations, arguing that oil market dynamics, not individual companies, are to blame for oil and gasoline prices.