Letter: Oil tax holiday won’t spur development – Billings Gazette, Feb. 20, 2013

February 20, 2013

Categories: Legislature, Letters, Oil and gas

http://billingsgazette.com/news/opinion/mailbag/oil-tax-holiday-won-t-spur-development/article_0f5a6cfd-2334-59d2-86b4-5799592ec018.html

Why are Montana Republicans still trying to sell the idea that a tax holiday for oil development will stimulate the industry in Montana? These holidays are largely irrelevant to how an oil play is developed and generally only succeed in stripping revenue from the communities near the development that are trying to provide services. A good example is what’s going on with the Bakken play in the Williston Basin. The majority of the Bakken development is in North Dakota where there is no tax holiday. In Montana the Republicans have been standing on the eastern border waving their tax holiday at the Bakken boom in North Dakota but attracting very little interest. At some point you hope that the Republicans will figure out that maybe tax holidays aren’t the issue.

The profitability of an oil play is based on geology, extraction and transportation technologies, and global markets. Montana’s rather pitiful, hat-in-your-hand local tax holiday reflects little more than a sad lack of understanding of the physical setting and economic scale of operations in the Bakken and other potential resources around the state. It really is time to put Montana’s oil tax holiday to rest. It’s doubtful any serious developer sitting on a serious resource is going to pack up and leave for lack of a tax holiday.

Monte Smith
Billings

 

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