Landowners urged to back incentives, fight severance tax on oil, gas royalties
By Burton Speakman
A group of current and potential oil and gas royalty recipients were asked to support an effort to fight Ohio’s severance tax by encouraging tax incentives.
The alternative presented Monday to the landowners at the Covelli Centre is for the state to provide tax incentives that would help development of natural-gas fueling station infrastructure.
The state is considering passing a tax break by taking money from the oil and gas industry, including those who receive royalties, said Robert Rea, president of Buckeye Mineral Development and board member of the Associated Landowners of the Ohio Valley.
“The opportunity is there with natural gas. We just need to use it,” he said.
Tax incentives would encourage companies to develop the filling stations needed to help spur growth in natural-gas vehicles that would help lead to energy independence for Ohio, Rea said. The severance tax would just be a redistribution of wealth from one group to another.
“We could become energy independent in just a few years. The resource is right beneath our feet,” he said.
In Europe, companies such as Fiat, Mercedes, Volkswagen and others already are producing natural-gas vehicles, said Ron Smith, a natural-gas engineer.
“They can’t wait to bring those products to the U.S., but they need to know that we’re going to support it,” he said.
Natural gas is a safe fuel, and the technology was built in this country, Smith said. “It’s a shame we don’t use it.”
The severance tax could leave property owners responsible for paying up to 20 percent of the cost, Rea said.
Gov. John Kasich proposed the addition of a severance tax for Ohio that was immediately decried by those within the industry. The measure did not pass in the most recent legislative session, but the governor has said it will be re-introduced. He has proposed adding the severance tax as a way to cut the state’s income tax.
This investment capital of the oil and gas industry is mobile, according to a statement by the Ohio Oil and Gas Association. The association argues that increasing the severance tax would hurt the state’s growing oil and gas industry.
“If the cost of doing business here in Ohio is too high, then companies will take their investments somewhere else,” according to the OOGA statement. “Increasing the current Ohio oil and gas severance tax rate would discourage such investments. It would also burden economically challenged areas throughout the state and landowners who want to lease their land and receive royalty streams.”