WASHINGTON—Oil and gas production has grown substantially in the United States over the past decade, playing a major role in the economies of states and regions where production occurs. However, for policymakers charged with best meeting the needs of residents and businesses, there has been limited analysis that allows for comparison of policies among states. Today, a new study posted by Resources for the Future (RFF) assesses how US state and local governments collect and allocate revenue from oil and gas production.
The study’s authors are RFF Senior Research Associate Daniel Raimi and RFF President Richard G. Newell. Their paper, US State and Local Oil and Gas Revenues, presents an analysis of how fiscal policies and oil and gas revenues vary among the top 16 oil and gas producing states.
The authors assess how US state and local governments collect and allocate direct revenue from oil and gas production through four key sources: (1) state taxes levied on the value or volume of oil and gas produced; (2) local property taxes levied on the value of oil and gas property; (3) oil and gas lease revenues from state lands; and (4) oil and gas lease revenues from federal lands. They also describe how state and local governments put these revenues to use by supporting state operations, trust funds, education, and local governments.
On average, state and local governments collect roughly 10 percent of oil and gas revenue, ranging from a low of roughly 1 percent to a high of nearly 40 percent. The paper measures these revenues against the total value of oil and gas produced in the 16 top oil and gas producing states using fiscal year 2013 as a benchmark. The largest shares of revenue flow to state government operations and education, followed by local governments. Some states also allocate a portion of oil and gas revenues to trust funds endowing future government operations and/or education expenditures.
Read the full study: US State and Local Oil and Gas Revenues.