An Aethon pump jack in the Moneta Divide oil and gas field east of Shoshoni. (Angus M. Thuermer Jr./WyoFile)

Wyoming is in the midst of a seemingly endless budget shortfall that the state’s bone-deep cuts have failed to solve. If we can’t balance our state budget by cuts, then the revenue side of the ledger deserves some attention. 

During the interim legislative session, legislators debated how to raise revenues. Yet now as the regular legislative session gets underway, we are facing another bill designed to reduce revenues. It’s a strange way to deal with a deficit.  

House Bill 11 is another oil and gas severance tax cut designed to give the industry a break while shortchanging our citizens. The House Minerals, Business & Economic Development committee will consider it on Wednesday during a meeting that begins at 8 a.m.

This bill would cost the state $13.5 million over the course of a year while it cuts the severance tax rate in half for both new production and renewed production of shut-in wells. 

Simply put, it’s nearly the same bill, different year. We have faced a severance tax cut bill every year since 2016, and they all failed until one passed last year. 

Yes, our state legislature passed an oil and gas severance tax break just last year. House Bill 243 has already cost Wyoming millions of dollars. 

This was a 2% severance tax break for new oil and gas wells when the price is below $50/barrel for oil and $2.95/1,000 cubic feet for gas. 

Furthermore, last year the Wyoming Oil and Gas Conservation Commission completely suspended the conservation tax for six months due to the pandemic. This conservation tax is how the WOGCC funds its budget, and it also pays for plugging thousands of orphan oil and gas wells when companies default, and their bonds fall short of covering those costs. This was the first time the commission had ever entirely suspended the tax since its inception in 1959. 

Last year, $54 billion in debt was shed by bankrupt oil and gas companies across the U.S. even as they handed out multi-million-dollar bonuses to their executives. Companies such as Chesapeake, Ultra and Whiting, all with Wyoming interests, were able to rid themselves of debt, handsomely reward their executives, receive COVID-19 relief and still benefit from tax breaks that rob Wyoming’s future generations. And yet the industry wants more public help. 

The pandemic relief referenced earlier appeared in several forms. The Bureau of Land Management implemented a temporary royalty reduction, allowing oil and gas companies to apply to reduce their federal royalty rate from 12.5% to 0.5% for 60 days. Wyoming was by far the largest recipient of those reductions, with 324 approved requests whose overall implementation cost federal and state programs $4.5 million, according to the Casper Star-Tribune.

Oil and gas companies also received federal Paycheck Protection Plan loans adding up to millions more in relief. And then in November, Gov. Mark Gordon used $15 million in CARES Act funds to start the Wyoming Energy Rebound Program, which is aimed solely at oil and gas companies. This was so popular that the governor added another $15 million to the program in December, gifting a total of $30 million to the state’s oil and gas industry. 

After all that assistance over the last 10 months, are the residents of Wyoming supposed to swallow yet another giveaway to the oil and gas industry while we struggle to fund our schools, provide needed health services and plow our highways? It’s time we say “enough is enough.” 

The oil and gas industry is a key component of Wyoming’s economy, providing jobs and critical revenue streams for our state, counties and local communities. But it still needs to pay its way. Once our mineral resources leave the ground, they are gone. The severance tax is how all Wyomingites benefit from these resources we hold. Yet every year, industry executives and lobbyist groups find excuses to dodge their financial obligations to the state. 

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A number of studies have shown that tax rates do not determine whether a well gets drilled. The most important factors are geology and market forces. Oil and gas prices were already low before the pandemic because of a global glut in production, so tax rates will play no part in starting new production. In fact, the opposite happened as financially stressed companies declared bankruptcy in increasing numbers.  

Fossil fuel markets have been in general decline for some time. Now the COVID-19 crisis has underscored our need to diversify Wyoming’s economy. We need to focus on empowering and strengthening other sectors of our economy, and we need to recognize that forgoing important revenues during this time of great need is not the answer. We can no longer afford to put industry interests over the well-being of Wyoming’s people. 

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  1. With the oil and gas industries following the coal companies in declining revenue as wind and solar provide cheaper energy sources, the Legislature would be wiser to accept this reality, not reduce the fossil fuel company taxes but use the funds the taxes generate to create funds earmarked for future help for employees who,, like those in the bankrupted coal industry, will lose pay, health insurance and retirement benefits.

  2. My two primary concerns are the expansion of the National Grasslands desecration in Converse County — it is virtually destroying that prairie ecosystem and lacing it with toxic dumps and god knows what else they have injected into the topsoil to sterilize it with their secret fracking fluids recipe.. My second concern is the real possibility the idiots in Cheyenne will begin leasing the state lands (along with their private partners), to companies who need a place to store their toxic garbage. A Texas firm has been salivating over the land in Eastern Natrona County for years — now the county commissioners are actually taking this possible source of revenue seriously. If the state boys are allowed to turn Wyoming into a national sacrifice area, then everything east of the mountains will look like a scene from the last Mad Max movie.

  3. Once again, Wyoming government shows it cannot govern itself out of a wet paper bag. The state should give up on the energy sector and throw its greedy propagandists out of the state. If you feed it, it will destroy whatever remains of the state that is worth viewing. Do you people really want the state to look like the rust belt? Or would you prefer the Appalachia look of mountains with their crests removed to extract filthy coal?