Category: State and Local Government

Oklahoma Follows Texas to Prohibit Hydraulic Fracturing Bans

On Friday, May 30, 2015, Oklahoma became the second state to officially ban local bans on hydraulic fracturing. The bill prohibits bans on hydraulic fracturing, as well as other oil and gas drilling operations. The three-person Oklahoma Corporation Commission will now continue to act as the main regulator of oil and gas operations in the state.

Governor Mary Fallin said:

Corporate Commissioners are elected by the people of Oklahoma to regulate the oil and gas industry. They are best equipped to make decisions about drilling and its effect on seismic activity, the environment and other sensitive issues.

The bill was written in response to proposals to increase oil and gas drilling regulations in major cities and as an increasing number of Oklahomans become disgruntled with the mounting number of earthquakes. Sponsored by leaders in the Oklahoma House and Senate, the bill passed the House by a vote of 64-32 and the Senate by 33-13. Amendments to the original bill will still allow cities and municipalities to place “reasonable” restrictions on oil and gas operations, such as setbacks, noise, traffic and fencing regulations.

The bill comes at a time of great controversy within Oklahoma as the Oklahoma Geological Survey recently said increases in earthquakes were “very unlikely to represent a naturally occurring process.” In February, the U.S. Geological Survey published a paper written by Oklahoma Seismologic Austin Holland stating that the increase in seismic activity in Oklahoma was from human-induced activities.

Kim Hatfield, chairman of the regulatory committee at the Oklahoma Independent Petroleum Association (OIPA) responded:

This is something the Oklahoma Geological Survey, Oklahoma Corporation Commissions and OIPA have been working on for well over a year. We knew this was a possibility.

Oklahoma’s oil and natural gas producers have a proven history of developing the state’s oil and natural gas resources in a safe and effective manner.


The Gas Tax

The American Petroleum Institute’s Gasoline Tax interactive map allows users to check out each state and the United States average state excise tax, other state taxes/fees, total state taxes/fees and total state and federal taxes.

Some of the states with the highest federal and state gasoline tax include:

  • New York — 68.90 cents
  • California — 68.18 cents
  • Connecticut — 67.70 cents
  • Hawaii — 66.85 cents

Some of the states with the lowest federal and state gasoline tax include:

  • New Jersey — 32.90 cents
  • South Carolina — 35.15 cents
  • Oklahoma — 35.40 cents
  • Virginia — 35.68 cents
  • Missouri — 35.70 cents

The federal government adds 18.40 cents per gallon in each state. That federal tax is higher than the total state taxes for the states of New Jersey, South Carolina, Virginia, Oklahoma and Missouri.

High gasoline taxes from the states and federal government have a huge impact on gas prices at the pump. This is a heavy burden that the consumers are having to bear the brunt. The federal government and many states feel that the increased revenue from the gas tax is beneficial and that it will encourage less gasoline consumption and more alternative fuels/transportation. However, these excessive and usually unnecessary taxes directly hurt American consumers and damage the United States economy. This tax should be a really low flat tax across the nation creating a fairer and less burdensome tax, while still generating revenue for the states and/or federal government.

Georgia Subsidizes 90 Percent of Nissan Leaf

A government’s decision to subsidize one electric vehicle model over all other vehicles is a problem. It distorts the economy picking winners and losers regardless of the environmental benefits. But when such also increases greenhouse gases it is even worse. Yet, this is the situation playing out in Georgia.

Metro Atlanta is the second largest market in the U.S. after San Francisco for electric vehicle sales. And many of these sales are due to one vehicle model: the Nissan Leaf. Atlanta has been the Leaf’s largest market over the past year, in large part because Georgia offers Leaf buyers a $5,000 tax credit. Coincidentally, Nissan played a significant role in the tax credit’s passage. Yet other electric and hybrid vehicles do not receive the same tax incentive. In cases where vehicles are sold directly by manufacturers, only the first 150 are eligible for the tax $5,000 tax credit. This provision seems designed to prohibit Tesla buyers from receiving this subsidy, since Tesla is the only major vehicle not sold through dealers. The subsidy also does not apply to gas-electric hybrids such as the Ford Fusion or Toyota Prius.

But the Nissan Leaf cannot even claim it helps the environment. Much of the fuel used to generate power in Georgia is coal. As a result, when the Nissan Leaf charges its battery with electricity, it relies primarily on coal, one of the most polluting power sources on the planet. Yet when the unsubsidized Toyota Prius charges its battery, it uses its oil-powered engine. As a result the Prius is responsible for fewer greenhouse gas emissions than the Leaf. In fact the Nissan Leaf produces almost as much greenhouse gas as a conventionally powered vehicle with good fuel efficiency such as the Honda Fit.

The retail price for the Nissan Leaf is approximately $30,000. Yet after factoring in gasoline savings and state incentives of $5,000, drivers can lease a Leaf for free. The monthly payment for a 24-month lease is $235 per month for a total of $5,640. Add in the $5,000 state tax credit and lessees come close to breaking even. In addition, gasoline savings of savings of approximately $100 a month ($2,400 total) provide lessees with nearly $2,000 in yearly profit. Georgia spent close to $2 million on tax credits for electric vehicle owners in 2013. It is time to retire a tax credit that distorts the economy and increases greenhouse gas emissions.

Balancing Environmental and Economic Concerns

While climate change is a consideration for most Americans, some metro areas are adopting unnecessary draconian growth restrictions. The best example may be the state of California. California Assembly Bill 32 mandates that by 2020 the state reduce its greenhouse gas emissions to 1990 levels. Research indicates that the state has just about reached that goal. But instead of celebrating that goal, California lawmakers want to go much farther. Assembly member Quirk has introduced a bill to plan for carbon reductions of 80% by 2050. A 2012 report by Greenblatt and Long found that commercially available technology would be sufficient to enable California to reduce greenhouse gases by 60% by 2050. However, meeting the 80% threshold will require technological advances.

Over the last twenty years, the Los Angeles region has actually lost jobs. Between 2001 and 2011 alone, L.A. County lost 7.1 percent of its jobs. Since 1990 the region has lost 150,000 manufacturing jobs. While all metro areas have lost manufacturing jobs, Los Angeles has lost the second highest number in the country; and those jobs made up a larger percentage of the economy than first place New York. And while poor leadership and national factors have contributed to these losses, the biggest factor may be environmental regulations. Many of Los Angeles’ industrial jobs have moved to other states such as Texas with looser environmental laws. Obtaining an 80% reduction in greenhouse gases would require the city to control emissions from ships and trucks at the Ports of L.A. and Long Beach. Yet the ports are the largest and second largest container ports in the country and supply a significant percentage of metro area jobs. The ports are the biggest supplier of manufacturing jobs.

While an 80% reduction in greenhouse gases may be desirable, it will also eliminate some of the few manufacturing jobs in the region. Los Angeles needs to be increasing not decreasing the number of blue-collar jobs. And manufacturing jobs are high-paying quality jobs. In a region with major economic problems, a little balance could go a long way.

EPA vs Texas

A fight against the Environmental Protection Agency (EPA) was won in Texas this past week as the EPA allowed Texas significantly more flexibility when dealing with state permits concerning pollution sources. Giving Texas more control over the environmental impacts that occur within the state. A hard fought win for Texas as they have been working for years to gain back the control that the EPA stripped away from them.

The compromise on Texas’s clean air plan can be used as an example for other states hoping to gain back some of their rights concerning environmental regulation. By allowing the states the ability to implement locally tailored plans and permits, plants will no longer fear being shut down due to overly strict federal regulation. Less regulation is for the better as Texas currently houses 832 drilling rigs, which accounts for 47% of all US oil rigs and 25% of the entire worlds!

number of rigs

This has boosted oil and gas severance tax revenue to an amazing $900 million dollars which has funded several projects. The projects would utilize the surplus to fund the State Water Plan which was create in 1997 but never received funding until now. The legislature in total created two funds that;

  • The State Water Implementation Fund (SWIFT) will contain $2.5 billion to fund projects in the State Water Plan.
  • The State Water Implementation Revenue Fund of Texas (SWIRFT) will contain $3.5 billion for road, port and rail infrastructure projects.

In a state that led national job growth in 2013, is a powerhouse in the energy industry, and increased environmental standards without EPA involvement; even less federal involvement can only be for the better.