Oklahoma Oil and Gas Severance Taxes: A Comparative Analysis

Mary Gade (), Karen Maguire and Francis Makamu ()
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Mary Gade: Oklahoma State University

No 1701, Economics Working Paper Series from Oklahoma State University, Department of Economics and Legal Studies in Business

Abstract: Oklahoma assesses a production tax of seven percent on the extraction of oil, natural gas, and other minerals. However, since July 2002, it has taxed production from horizontal wells at only one percent for the first 48 months of production. This is a significant tax incentive relative to its neighboring states, Texas and Kansas, particularly considering the limited evidence as to the effectiveness of severance tax incentives for increasing in-state development of immobile resources. This paper empirically examines whether the severance tax incentive has encouraged horizontal development in Oklahoma relative to Texas and Kansas. Our findings indicate that the Oklahoma tax exemption has not had a significant influence on horizontal drilling.

Keywords: Severance Tax; Oil and Natural Gas; Hydraulic Fracturing (search for similar items in EconPapers)
JEL-codes: H71 H73 Q32 Q35 Q48 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2016-09
New Economics Papers: this item is included in nep-ene and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:okl:wpaper:1701

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