Some Thoughts. Curious About Your Response.

[Ponca Dan]

A few days ago there was a thread about the failure of the Step Up bill. Most of the back and forth revolved around which party was responsible for its demise. It seemed many on both sides were upset that the Oil & Gas Industry managed to beat back a tax increase to be placed on its shoulders. I’m not sure why anyone would be surprised that O&G fought against the bill. And there is little doubt they carry a lot of clout with local politicians. The bill probably failed because of O&G’s actions.

I asked why so many on this board felt it was a good thing to demand O&G be taxed to pay for something everybody agreed was needed. Why that industry in particular? Unfortunately only one person responded with an answer. His argument was that O&G receives subsidies. That struck me as missing the point, a completely different argument from the one being made to force them pay the tax. Anyway no one else took up the argument and my question remained unanswered.

But that has not kept me from thinking about the subject, and I wanted to post some thoughts to see if they engender any response. So here goes:

For those of you who object that O&G receives subsidies for which they do not deserve I completely agree, and would be more than happy to work with you to get them ended. The subsidies are nothing more than a tax on the populace. We are forced to pay taxes so the government can subsidize the industry. That is as wrong as it can be, and all of us should be incensed that it happens. It is nothing more than a hidden tax perpetrated on the rest of us by crony capitalist politicians in league with an industry that has captured the government.

But that is a separate issue from the one being made by the Step Up folks. What many people don’t seem to understand is a tax on O&G is a tax on us. Do you not realize that O&G will pass those expenses on to us? It’s a sneaky way the politicians can tax us without facing criticism. “Oh, no,” they will say, “the tax is in O&G, not the rest of you!” Hogwash! Any business has to pass on its expenses to the buyer, or it won’t stay in business. Those of you lauding the idea that O&G will get slapped with a tax that you won’t have to pay are deluding yourselves. You’re playing right into the crony capitalists’ hands.

So, if Step Up had passed the Oklahoma taxpayers would be on the receiving end of a double whammy. We would pay a hidden tax for the subsidies, and another hidden tax because of Step Up.

I’m curious as to your replies.

 

[CSCOTTOSUPOKES]

If you ever want Oklahoma’s economy to diversify and expand beyond the scope of oil and gas, raising the gross production tax is one of the fundamental first steps.

 

[Ponca Dan]

If you ever want Oklahoma’s economy to diversify and expand beyond the scope of oil and gas, raising the gross production tax is one of the fundamental first steps.

Two questions:
1). Why O&G specifically?
2). Why taxes?

 

[Ponca Dan]

Here are some ideas to try in place of raising taxes. I’m just spitballing here; haven’t thought any one of these ideas through. Just off the top of my head:

1) Rather than raise taxes, lower spending and use the money to help pay for education;
2) Eliminate ALL subsidies to every industry and take that money to pay for education;
3) Lower business taxes to a very low rate to entice companies to expand to Oklahoma;
4) Create a form that allows individual taxpayers to decide what portion of their taxes go to individual programs/agencies. Those programs would have to survive off the funds allocated to them by the people paying the taxes. If they can’t survive then they are eliminated;
5) Sell off a massive number of school buildings to private companies that will use the buildings for private education;
6) Any parent that home schools would be exempt from taxes that go to a school system they don’t use.

Those are a few ideas from the top of my head, ideas that don’t involve government gobbling up even more of taxpayers’ money. I’m sure there are countless ideas from outside the “tax and spend” box. It’s pretty obvious that the tax and spend model has reached the end of its usefulness. It’s time to try something new. Who else has an idea? Or, if you prefer please explain why you think raising taxes on industries like O&G is the proper course of action.

 

[CSCOTTOSUPOKES]

Two questions:
1). Why O&G specifically?
2). Why taxes?

1) Oklahoma is the #5 petroleum producer in the country. It’s directly or indirectly responsible for 1 in 5 jobs in this state. As such, you’re talking a very healthy chunk of the economy’s wealth. Oil and gas goes into our schools and claims they’re teaching STEM by fracking Twinkies.

https://stateimpact.npr.org/oklahoma/2017/06/15/oils-pipeline-to-americas-schools/

2) Oklahoma is #10 among the top 10 petroleum-producing states nationally. The GPT is among the lowest, if not the lowest in the country. And then we give multi-million tax rebates and breaks on top of it. As I said before, the difference in 7 percent and current levels is in the hundreds of millions of dollars. Oklahoma has a budget deficit nearing 1 billion. Wyoming has an 11 percent GPT...some of our new wells are taxed at 1 percent.

We would wipe out an enormous pile of our state deficit with one tax increase.

http://www.cotce.ca.gov/documents/r... state tax comparison report 12-08- final.pdf -> page 6



These are all facts. That’s a problem in this state, no matter how you look at it.

 

[Ponca Dan]

1) Oklahoma is the #5 petroleum producer in the country. It’s directly or indirectly responsible for 1 in 5 jobs in this state. As such, you’re talking a very healthy chunk of the economy’s wealth. Oil and gas goes into our schools and claims they’re teaching STEM by fracking Twinkies.

https://stateimpact.npr.org/oklahoma/2017/06/15/oils-pipeline-to-americas-schools/

2) Oklahoma is #10 among the top 10 petroleum-producing states nationally. The GPT is among the lowest, if not the lowest in the country. And then we give multi-million tax rebates and breaks on top of it. As I said before, the difference in 7 percent and current levels is in the hundreds of millions of dollars. Oklahoma has a budget deficit nearing 1 billion. Wyoming has an 11 percent GPT...some of our new wells are taxed at 1 percent.

We would wipe out an enormous pile of our state deficit with one tax increase.

http://www.cotce.ca.gov/documents/reports/documents/LECG state tax comparison report 12-08- final.pdf -> page 6



These are all facts. That’s a problem in this state, no matter how you look at it.

Earlier I argued that a tax on O&G is not a tax on O&G, but instead is a manipulated hidden tax on the rest of us. The government has cleverly devised a way to collect taxes from us without our knowing. We’re stupidly cheering this action. The O&G industry is simply being used as the tax collector, because they pass on this excess expense to us via higher prices. The fact that 20% of economic activity in the state is O&G is immaterial. The fact that other states willingly gouge out more from them is immaterial. All of us will pay for the tax via higher prices. Why doesn’t the legislature Cowboy up, look us all in the eye and say they intend to extort more money from us, rather than circumnavigating the tax thru an industry?

 

[CSCOTTOSUPOKES]

Earlier I argued that a tax on O&G is not a tax on O&G, but instead is a manipulated hidden tax on the rest of us. The government has cleverly devised a way to collect taxes from us without our knowing. We’re stupidly cheering this action. The O&G industry is simply being used as the tax collector, because they pass on this excess expense to us via higher prices. The fact that 20% of economic activity in the state is O&G is immaterial. The fact that other states willingly gouge out more from them is immaterial. All of us will pay for the tax via higher prices. Why doesn’t the legislature Cowboy up, look us all in the eye and say they intend to extort more money from us, rather than circumnavigating the tax thru an industry?

It’s not being used as the tax collector...that’s just wrong and you know it. We’ve given them a free ride, and gifts. It just needs to stop.

 

[Ponca Dan]

It’s not being used as the tax collector...that’s just wrong and you know it. We’ve given them a free ride, and gifts. It just needs to stop.

Agree with your last sentence (even though it has nothing to do with the topic at hand). We’ll just have to disagree as regards your first sentence.

 

[CSCOTTOSUPOKES]

Agree with your last sentence (even though it has nothing to do with the topic at hand). We’ll just have to disagree as regards your first sentence.

What do you think of schools teaching a pro-oil anti-climate science cirriculum to little kids? For-profit indoctrination?

 

[Ostatedchi]

Sales tax on services. It broadens the revenue stream, isn't regressive, and is shared across all industries.

 

[CSCOTTOSUPOKES]

Sales tax on services. It broadens the revenue stream, isn't regressive, and is shared across all industries.

Oklahoma’s gross production tax isnt progressing anything. It’s regressing other industries and that’s just the way it is. Other means of taxation that are fair would work as well, but this has to be part of it.

Oil and gas is responsible for earthquakes in Oklahoma. The impact of the industry is far-reaching in this state, and there should be reasonable consequences to it. The worst energy tax burden in the country IS regressive.

 

[Ostatedchi]

Oklahoma’s gross production tax isnt progressing anything. It’s regressing other industries and that’s just the way it is. Other means of taxation that are fair would work as well, but this has to be part of it.

Oil and gas is responsible for earthquakes in Oklahoma. The impact of the industry is far-reaching in this state, and there should be reasonable consequences to it. The worst energy tax burden in the country IS regressive.

Look up the definition of 'regressive' as it relates to taxation. I'm against regressive taxes. Educate yourself then come back to me.

 

[Medic007]

Oil and gas is responsible for earthquakes in Oklahoma.

Never mind all of the fault lines from Oklahoma being dead center of some ancient mountain ranges as illustrated by...

 

[CSCOTTOSUPOKES]

Never mind all of the fault lines from Oklahoma being dead center of some ancient mountain ranges as illustrated by...

So you’re saying fracking and wastewater injection has nothing to do with it. Do you understand how stupid that sounds?

Carry on.

 

[Ostatedchi]

So you’re saying fracking and wastewater injection has nothing to do with it. Do you understand how stupid that sounds?

Carry on.

Fracking, no
Waste water injection, yes.

 

[Medic007]

So you’re saying fracking and wastewater injection has nothing to do with it. Do you understand how stupid that sounds?

Carry on.

You posted that the oil and gas industry is "responsible for earthquakes." I merely responded by posting a map of fault lines, you know, the geological features that actually cause earthquakes. Unless the oil and gas industry installed the fault lines, they aren't responsible for earthquakes. Now, if you want to discuss the potential hazards of injection wells and their possible relationship to an increase in shallow earthquake frequency (hasn't been proven, not enough data yet), I'm all eyes. Earthquakes have been occurring in Oklahoma since forever. Seismic equipment wasn't even installed in Oklahoma until 1961, so the measureable data for Oklahoma is fairly new. Recently, more equipment has been installed and has allowed for better data collection.

In summary, do you understand how stupid "oil and gas is responsible for earthquakes in Oklahoma" sounds?

Carry on.

 

[CSCOTTOSUPOKES]

You posted that the oil and gas industry is "responsible for earthquakes." I merely responded by posting a map of fault lines, you know, the geological features that actually cause earthquakes. Unless the oil and gas industry installed the fault lines, they aren't responsible for earthquakes. Now, if you want to discuss the potential hazards of injection wells and their possible relationship to an increase in shallow earthquake frequency (hasn't been proven, not enough data yet), I'm all eyes. Earthquakes have been occurring in Oklahoma since forever. Seismic equipment wasn't even installed in Oklahoma until 1961, so the measureable data for Oklahoma is fairly new. Recently, more equipment has been installed and has allowed for better data collection.

In summary, do you understand how stupid "oil and gas is responsible for earthquakes in Oklahoma" sounds?

Carry on.

https://www.google.com/amp/s/www.wa...are-causing-texas-earthquakes-study-suggests/


Carry on.

 

[CSCOTTOSUPOKES]

https://www.cbsnews.com/amp/news/60-minutes-oklahoma-rise-in-quakes-linked-to-man-made-causes-2/

 

[Ostatedchi]

https://www.cbsnews.com/amp/news/60-minutes-oklahoma-rise-in-quakes-linked-to-man-made-causes-2/

How about actual fact based conclusions from the Oklahoma Geological Survey regarding induced earthquakes.

 

[Medic007]

https://earthquake.usgs.gov/learn/kids/eqscience.php

 

[Medic007]

http://science.sciencemag.org/content/348/6241/1336

 

[Medic007]

https://earthquake.usgs.gov/earthquakes/browse/stats.php

 

[Medic007]

http://www.sciencemag.org/news/2016/09/scientists-may-have-solved-mystery-giant-midwest-earthquakes

 

[CSCOTTOSUPOKES]

How about actual fact based conclusions from the Oklahoma Geological Survey regarding induced earthquakes.

Oh really?

http://www.normantranscript.com/new...cle_c4d88168-9756-5aab-8884-4f44bea29d77.html

 

[Medic007]

Oh really?

http://www.normantranscript.com/new...cle_c4d88168-9756-5aab-8884-4f44bea29d77.html

I hope you take the time to read this serious reply.

I'm not sure why you don't realize you're chasing your tail. Both Ostatedchi and I have agreed that wastewater injection wells likely contribute to earthquake activity. Nobody is arguing against that. It hasn't been "proven," but the data is sure looking compelling.

You still have to have a fault to slip in order for an earthquake to form. I posted a link to an study that suggests the rate of injection is most likely the factor associated with earthquake genesis and not total volume, etc. Injection wells aren't new to Oklahoma. Injection wells have been around for as long as oil in Oklahoma has been because you have to do something with the water that comes up along with oil and gas. What has changed is the amount of water requiring injection because of increases in production of oil and gas in Oklahoma.

And in the interest of science, you have to account for all confounding variables in research because they can skew your data and tank your results. In case you don't know what a confounding variable is, it's an outside variable that can change the effects of dependent and independent variables. In addition to increased oil and gas production, earthquake detection equipment in Oklahoma has also greatly expanded.

The first seismograph was installed in Oklahoma in 1961. Prior to its installation, earthquake "detection" was what our aunts, uncles, moms, dads, etc were able to "feel." Naturally, the rate of detection was very low and was limited to earthquakes that could be felt or measured from other locations. Earthquakes in Oklahoma obviously didn't begin in 1961, but our ability to detect them within the state did. Now fast forward about 15 years and a seismograph network was created that featured 8 permanent seismographs until 2010. Since 2010, many more monitoring stations have come online. As of today, the Oklahoma Seismic Network has 37 detection stations throughout the state. Interestingly, the number of recorded earthquakes has also been increasing since 2010. Is the expansion of the seismic network a confounding variable? I don't know since I don't work in that field, but the correlation is worth mentioning and probably investigating.

To illustrate...

There were about 59 documented earthquakes in Oklahoma's history until 1961. These all came from historical accounts and seismographs in other states. From 1961 until 1976, 70 additional earthquakes were added to Oklahoma's known total. That's 70 quakes in 15 years after the installation of the state's first seismograph as compared to all of the years of previous historical record. In 1977, 7 additional seismographs were installed and Oklahoma recorded more than 1,500 additional earthquakes in the next 25 years. So 1,500+ quakes in 25 years since the addition of 7 additional seismographs compared to 70 quakes in the 15 years after the installation of the first seismograph compared with 59 from Oklahoma's history prior to that. Did the rate of earthquakes really increase from 59 in 50+ years to more than 1,500 in 25 years? Or did the ability to detect more of them lead to that result? Tough to say since the data isn't comparable.

Fast forward to the time period from 2010 until 2015, when the number of detection stations increased from 8 to more than 30, and our detected earthquakes increased from 41 in 2010 to 888 in 2015. Again, is it better detection ability or is it more earthquakes? Or is it both? I don't pretend to know that answer, but it is something that has to be contended with in any research because the ability to detect earthquakes is definitely a confounding variable.

Sorry for the long read. I hope you enjoyed it. I like this kind of dialogue with you and hope you respond in kind.

 

[knoblock]

Production taxes are not passed on by O&G companies. The market determines the commodity price. Simply stated the O&G companies keep the difference between low and higher production taxes.
Been in the O&G industry my whole life and have been involved in drilling hundreds of wells. Never did the production tax rate affect the decision to drill. Am very disappointed in the industry's greedy position on this matter and lack of concern for education.
If this article is correct, the Democrats offered a very acceptable alternative to get enough votes to pass. Sad for Oklahoma.
http://newsok.com/step-up-plan-defeated-in-house-despite-majority-vote/article/5583230