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Show SEVERANCE TAXES PUNISH THOSE WHO EXPLORE FOR OIL Because do come ? oil costs so much more to find in Utah, the wells that in have to produce a lot longer to pay off the costs of those that dont. And since severance taxes are levied on P the pumped, kinds of ' not the profit, the oil man who spends all I money exploring for oil, but finds very little of it, must defer his breakeven point even longer to pay the taxes. Most independent oil men plow back 100 of their profit into more exploration. So the less profit they make, the less they drill. See, the punishment works. They stop exploring for oil. But then the punishment backfires: the less oil they discover, the fewer taxes oil -- ; they pay. UTAH CANT TAX OIL THATS NOT BEEN FOUND. RAISE TAX REVENUES NOT TAX RATES. Youve read in the papers about all the money oil companies are supposed to owe the state. Millfons some say. But quoted in the Deseret News, an audit manager in the legislative auditor generars office said oil companies may not owe a dime. In either case, independent oil men support responsible regulation and tax collection measures for taxes on the books today. Why raise taxes... when the state doesnt even know if its due more Utah, the drillers graveyard, has scared off even fie most brazen drillers. Yet, were it not for those who risked and won, Utahs current tax revenue picture would be even bleaker. . Some of the taxes the state collects in 1983 are on oil these drillers discovered 20 years ago. But Utahs oil production is in steady decline. From 40 million barrels six years ago to 25 millbn barrels last year. That means Utahs known oil fields are dying. They all die sooner or later. But saddly, new ones arent taking their place. You see, oil fields die so slowly you barely notice. If you dont quickly bring on new fields, and good ones, your tax base goes to pot. Thats Utahs problem today. If the decline continues, Utah may once again become a drillers graveyard. And we taxpayers will have to pay under existing rates? ADDED SEVERANCE TAXES WILL DRIVE UP UNEMPLOYMENT. Unemployment in Utahs oil producing counties is running 20 to 30 higher than the rest of the state. When taxes eat drilling capital, oil workers go hungry. Yet this proposed severance tax increase, the one that will throw even more oil workers onto the street, will pay for teacher and public employee pay raises. Hard to understand. A TAX HIKE WILL SHUT DOWN MARGINAL OIL WELLS. the wells in Utah pump less Half M than 20 barrels of oil a day. But all of them didnt start that way. Wells naturally start big, then taper off. When the costs of keeping them going exceed the income, the operator plugs them. Hes losing money. Now if taxes go up, the costs of operation overtake profits a lot faster. Thus, wells that may have made a small profit and paid taxes, will be abandoned bng before their time. Even a slight increase in the tax will remove thousands of barrels of oil from the tax rolls. |