Guest opinion: Tax holiday no longer makes sense in oil patch – Billings Gazette, March 19, 2013

March 19, 2013

Categories: Legislature, Oil and gas, Plains Speaking

By Pat Wilson

When a bunch of oil and gas executives fly in from out of state and line up at a legislative hearing and say they couldn’t possibly do business in Montana if they had to pay production taxes (like they would anywhere else), my flimflam alarm goes off.

When the Legislature enacted the tax holiday for oil and gas drillers, oil prices had been hovering between $11 and $16 per barrel. Today, oil is above $90 a barrel. North Dakota taxes it. Wyoming taxes it.

But by the time Montana starts taxing production on any given well, most of the oil that well will ever produce has already been pumped out, and will be taxed next to nothing.

Community costs

Meanwhile, there are significant costs being borne by communities in Eastern Montana, and the boom in oil and gas drilling is the reason. We are struggling to pay those costs now. In my area, eastern Roosevelt Country, most all of the infrastructure is in shambles. Heavy trucks and machinery have destroyed the roads, bridges, and culverts. Bainville and Culbertson are reeling from the impact of great numbers of people on the schools, the medical facilities, the law enforcement agencies the sewers, the landfills–everything.

Because more than half of the total production of a Bakken well occurs during the 18-month tax holiday, I feel strongly that oil companies are getting a free pass at the expense of the affected communities. To those legislators who believe Eastern Montana has become some sort of Eldorado, a happy Utopia awash in prosperity, I challenge them to live here, to ruin their vehicles on our roads, to breathe our dust-laden air, enroll their kids in our overwhelmed schools, spend five hours in an ER waiting for a harried, overworked physician — as my wife did last summer!

Repeal tax break

Even if the oil and gas tax holiday made sense in the 1990s, it certainly makes no sense today during this drilling boom. Taxes are a tiny factor in natural resource development, but some legislators act as if it’s the only factor. If that were true, there’d be far more drilling in Montana than there is, for our taxes are the lowest.

The time is now to repeal this oil and gas tax holiday. Oil and gas companies are doing very well right now, and they do not need a “holiday” at the expense of all the other taxpayers in Montana.

Robert “Pat” Wilson is a land, mineral and royalty owner who ranches near Bainville.




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