Oil Man Proposes Increase In Oklahoma Oil-and-Gas Tax 182
Hugh Pickens DOT Com (2995471) writes "Daniel Gilbert reports at the WSJ that Oklahoma oil man George Kaiser is breaking with fellow energy executives in asking the state to raise taxes on oil companies, including his own. 'Oklahoma is in desperate financial circumstances,' says the billionaire who controls Kaiser-Francis Oil Co. Kaiser says a higher tax on oil-and-gas production could help the state pay for education and much needed infrastructure improvements, and is asking legislators to return the state's gross production tax to 7 percent, challenging a plan proposed by fellow oil company executives who want to see the rate settle at 2 percent for the first four years of production.
Several energy companies and the State Chamber of Oklahoma say that lower tax rates for the costliest oil and gas wells are necessary to continue drilling at a pace that has stimulated economic activity and created other sources of revenue. Berry Mullennix, CEO at Tulsa-based Panther Energy, credits the tax program for helping his company grow to more than 90 employees, up from 18 a few years ago. 'I would argue the tax incentive is a direct reason we have so much horizontal drilling in the state today,' Mullennix says ... When companies decide to drill a well, they make their best guesses on how much it will cost to drill the well, how much the well will produce and what the commodity price will be. All of those estimates can vary widely, Kaiser says. 'With ad valorem taxes, the difference among states is 2 or 3 or 4 percent. The other factors can vary by 50 or 100 percent.' Compared with those other factors, Kaiser says the tax rate is incidental. 'It's a rounding error.'"
Several energy companies and the State Chamber of Oklahoma say that lower tax rates for the costliest oil and gas wells are necessary to continue drilling at a pace that has stimulated economic activity and created other sources of revenue. Berry Mullennix, CEO at Tulsa-based Panther Energy, credits the tax program for helping his company grow to more than 90 employees, up from 18 a few years ago. 'I would argue the tax incentive is a direct reason we have so much horizontal drilling in the state today,' Mullennix says ... When companies decide to drill a well, they make their best guesses on how much it will cost to drill the well, how much the well will produce and what the commodity price will be. All of those estimates can vary widely, Kaiser says. 'With ad valorem taxes, the difference among states is 2 or 3 or 4 percent. The other factors can vary by 50 or 100 percent.' Compared with those other factors, Kaiser says the tax rate is incidental. 'It's a rounding error.'"
Idle threats (Score:5, Insightful)
The other companies that argue higher taxes would scare them from drilling are full of crap. How about paying a fair share to keep the infrastructure well maintained and the populace well educated?
As the last line of the summary says. Compared with those other factors, Kaiser says the tax rate is incidental. 'It's a rounding error.'"
Lack of demand, not capital, not labor is the key. (Score:5, Insightful)
Berry Mullennix, CEO at Tulsa-based Panther Energy, credits the tax program for helping his company grow to more than 90 employees, up from 18 a few years ago. 'I would argue the tax incentive is a direct reason we have so much horizontal drilling in the state today,' Mullennix says
It would be far more efficient to tax the damned company and keep it at 18 people and use the money to bridges and roads and schools. That would create far more than the measly 72 jobs created by that company.
Look, these entrepreneurs are hard negotiators. If the taxpayers start with, "please please please create some jobs", they will ask for an arm and a leg. You give them an arm and a leg they will be back next year, "an arm and a leg? That was last year. What are you gonna give us this year?". You give another arm and a leg. And the year after they ditch you and go to the next country or state or country because, "your state has people without arms and legs, we can't employ them".
There is plenty of capital. If this Panther Energy does not want to invest there will be a Jaguar Energy or Tiger Energy. The capital markets are sloshing with 3 trillion dollars not knowing where to invest. Tell them the same thing they tell their employees, "this is what this job pays, if you don't like it, keep moving there are plenty who would work at this wage". Well, "this is what costs to do business in our state. If you don't like it, keep moving there are plenty of other investors for us". Unless the tax payer negotiates like this, you will not get anywhere. These crony capitalists invest in the election system, and get their own shills elected as legislators and government executives. That is why money in politics is so insidious.
What we now lack is demand. That is what is stifling the growth. Not the lack of capital, Not the lack of labor (lack of labor would lead to wage inflation). What we need is tough negotiators to represent the tax payers in the government.
Won't happen (Score:3, Insightful)
Oklahoma is one of the most conservative states of the Union. Instead the state government, under pressure from jerb creators, will cut social programs and raise sales taxes, while cutting corporate income taxes.
Re:Idle threats (Score:3, Insightful)
I don't know what school you went to but it should be nuked from orbit and your parents need to be dope slapped, twice, just to make sure. Lets seem 7 percent versus 2 percent.... Well golly, that's darn close to 5 percent. Or in your math. a rounding error. Really?
Comparing the current tax rate to the proposed tax increase is not a "rounding error" at all. It's five percent, just as you say.
Comparing the additional cost of this proposed tax increase to all the other costs involved in obtaining the fuels is what has been identified as a rounding error.
So, while what you say is correct, you're missing the point entirely. This is why context is more important than trying to show everyone how clever you are for finding the obvious "flaw" everyone else "missed". It would be wonderful to see a single Slashdot discussion where your mistake isn't repeated.
Re:Everyone prepare for Armageddon! (Score:3, Insightful)
You mean he wants to divide the costs of infrastructure evenly amongst the people who benefit it? Outrageous! Someone get the rope!
Re:Everyone prepare for Armageddon! (Score:5, Insightful)
As if cutting/reducing services does not place a burden on its citizens?
If something can be cut without the citizens noticing it, then cut it (regardless of overall financial health, it's just waste).
But most services are there for a reason. It may be a lesser burden (especially if you take the long term view) to raise taxes than to allow certain services to degrade past the point of utility.
Re:Stop the presses! (Score:4, Insightful)
A rich asshole who has everything life has to offer feels guilty and proposes liberal ideas. No! Say it ain't so! That's SO unique!
Wrong! Headline reads, "CEO of an established oil company, seeks to eliminate subsidy on new competitors, while pretending to be self-sacrificing."