It’s time to call the gas industry’s bluff

 


There’s been a steep falloff in friendly chitchat around the local gas pumps, and no wonder. With diesel at $3.40 a gallon and gasoline only somewhat cheaper, it’s common to see someone drop $100 on a tankfull.

A typical American family will spend more than $3,000 on liquid fuels this year, and another two grand on electricity and natural gas. Lodgepole pine is $250 a cord, which seems pricey, but is much cheaper than the profane price I’m paying for propane.

The hemorrhaging of family energy budgets is infusing billions into the ledgers of Shell, BP, Exxon, Anadarko, Williams, Chevron, and EnCana, the large multinationals that now dominate natural gas production in the Rockies. Next year, the combined global profits of those seven companies will approach $100 billion.

If there’s a silver lining here, it’s that some state governments’ severance tax collections are also rising. Severance taxes are designed to capture some of the wealth that is lost when non-renewable natural resources are extracted from the earth. Wyoming and New Mexico, two states where gas drilling has boomed over the past decade, now boast billions of dollars in their severance tax funds.

But my “progressive” state of Colorado, the fastest-growing gas producer in the nation, we continue to play the rube when it comes to severance taxes. Coloradans are a smug bunch. We don’t think of Wyoming as the state that makes energy extractors pay their fair share, we think of it as the Tetons, half a million antelope, and a bunch of rednecks. But if energy is an IQ test for Americans, we’re the dumb ones.

Although Colorado’s nominal severance tax rate is 5 percent, the state collects less than 2 percent, because we allow energy companies to deduct the county property taxes they pay from their severance tax bill, and because three-fourths of the state’s wells pay no severance tax at all due to Colorado’s “stripper well” exemption. This provision made sense when oil was $15 per barrel and natural gas was $1 per thousand cubic-feet. Since 1999, these prices have soared. Today, oil prices are above $90 and natural gas trades at $6.

By piggybacking the property tax and stripper-well exemptions together, oil companies have worked the Colorado tax code like a broken slot machine. The poster child is Weld County in the northeastern part of the state, where producers extracted $7 billion of oil and gas between 2002 and 2006. In three of those years, Colorado collected not one dollar in severance taxes in Weld County.

The upshot is that since 2002, Colorado has left $1.3 billion on the table, even as the state has struggled to meet its bligations for higher education, health care and roads. In Colorado, we aren’t giving it away; we pay them to take it.

I have nothing against natural gas. It is the planet’s finest fossil fuel. I admire the roughnecks who work grueling 12-hour shifts on the drilling rigs. From a geotechnical perspective, the wizardry being deployed in the Rockies is a marvel. My friend Charlie’s job is to dowse an eight-foot-thick oil seam a mile underground, then thread a drilling bit along it, horizontally, for a mile. This makes heart surgery look like child play.

When it comes to politics, though, the petroleum industry is a playground bully. Recently, one industry-funded propaganda outfit, Americans for American Energy, accused eight mayors in western Colorado of aiding and abetting Osama bin Laden by opposing natural gas drilling on the Roan Plateau, a rare wilderness highland. Since 1990, the petroleum industry has drilled more than 150,000 wells in the Rockies and leased — in what historians may dub the Cheney Giveaway — 30 million acres of federal land. That’s the equivalent of 15 Yellowstones, yet the industry’s henchmen continue to whine about what they call unreasonable limits to access.

They also avoid any discussion of severance taxes. When Colorado Rep. Kathleen Curry recently proposed hiking our severance tax rate so that it would be equal to Wyoming’s, oil and gas companies suggested they might leave the state.

This is a well-worn -- and empty -- bluff that Colorado legislators should call. The Rockies are the only place in North America where gas production is increasing. Colorado’s gas production has increased fivefold since 1990, and adjusting our severance taxes wouldn’t slow the rush a bit.

The current gas boom won’t last forever, and we should not squander the opportunity to reap long-term benefit. Wise public policy recognizes that fossil fuels are nonrenewable, and that the citizens of Colorado and other states have a legitimate claim to a fair share of their state’s mineral bounty. Legislators should also ensure that some portion of that wealth is saved for future generations, who are likely to look back at the current bonfire and wonder what we were thinking.

Randy Udall is a contributor to Writers on the Range, a service of High Country News (hcn.org). He lives in Carbondale, Colorado, where for 13 years he directed the Community Office for Resource Efficiency, a nonprofit organization that partners with local governments and utilities to promote efficient and renewable energy.

Note: the opinions expressed in this column are those of the writer and do not necessarily reflect those of High Country News, its board or staff. If you'd like to share an opinion piece of your own, please write Betsy Marston at [email protected].

High Country News Classifieds
  • NEW AGRARIAN APPRENTICESHIP
    Quivira Coalition's 2020 New Agrarian Apprenticeships in Regenerative Ranching and Farming -Apprenticeships run 4/20 - 11/20 Applications accepted 10/15/19 - 12/1/19 NAP partners with skilled...
  • PHILANTHROPY DIRECTOR
    Wilderness Workshop seeks a full time Philanthropy Director to raise funds for our team. Learn more: www.wildernessworkshop.org
  • EXECUTIVE ASSISTANT WITH WESTERN RESOURCE ADVOCATES
    Western Resource Advocates (WRA) seeks an enthusiastic and organized problem solver to join our growing team as an Executive Assistant. The Executive Assistant is instrumental...
  • WYOMING OUTDOOR COUNCIL
    Two positions: Development Director OR Development Writer, Communications Director. Full job descriptions at https://wyomingoutdoorcouncil.org/careers.
  • CONSERVATION PROJECT MANAGER
    Great Land Trust seeks to hire a Conservation Project Manager. Position is full-time, based in Anchorage, Alaska. First review of applications will be on October...
  • EXECUTIVE DIRECTOR
    Eagle Valley Land Trust Executive Director Position Description Summary of Position: The Executive Director, working with and reporting to the Board of Directors, has overall...
  • FINANCE & LOGISTICS COORDINATOR
    The Rocky Mountain Biological Laboratory, founded in 1928 as an independent nonprofit organization, is a biological field station located near Crested Butte, Colorado. Our primary...
  • DEVELOPMENT DIRECTOR
    See Full Job Description
  • DEVELOPMENT COORDINATOR
    Position: Development Coordinator Responsible to: Executive Director Time Commitment: 15-20 hours per week, or as otherwise agreed upon General Description: The Development Coordinator assists the...
  • EDUCATION CENTER MANAGER
    Friends of Cedar Mesa seeks a full-time Education Manager for the Bears Ears Education Center to provide day to day operational and administrative oversight. See...
  • TROUT UNLIMITED SCP SOUTHWEST REGIONAL DIRECTOR
    Seeking to hire an experienced advocate/manager to oversee the organization's sportsmen/women-driven advocacy in Colorado, New Mexico and Arizona. Open until filled
  • PROGRAM MANAGER
    for northern AZ collaborative conservation ranchlands group
  • AMAZING PROGRAM DIRECTOR
    If you're an amazing Program or Education Manager looking for an exciting and fulfilling position with an organization that makes a difference in the community,...
  • EXECUTIVE DIRECTOR
    Partners are seeking an experienced and energetic Executive Director who is excited about the opportunity to lead our growing organization! A full description of the...
  • EXECUTIVE DIRECTOR
    High Country News Seeks an Executive Director to advance its mission, grow its audience and influence, and strategically and sustainably guide the organization through a...
  • 2 PROPERTIES ON THE WESTERN EDGE OF THE GILA WILDERNESS
    Organic farm, hot springs, San Francisco River runs through both. [email protected]
  • CHUCK BURR'S CULTUREQUAKE.COM BLOG
    Change will happen when we see a new way of living. Thinking to save the world.
  • SOCIETY FOR WILDERNESS STEWARDSHIP BOARD MEMBER
    Join the SWS board and help us broaden, diversify, and engage the wilderness community.
  • NEW MEXICO BIRDER'S PARADISE.
    Fully furnished 2B/2B home near Bosque del Apache NWR, great for nature lovers.
  • COMING TO TUCSON?
    Popular vacation house, furnished, 2 bed/1 bath, yard, dog-friendly. Lee at [email protected] or 520-791-9246.