Infographic illustrates why Oklahoma should end drilling tax break

A new infographic from Together Oklahoma, a coalition which includes Oklahoma Policy Institute, shows why Oklahoma needs to reign in a tax break for horizontal drilling.

What It Means for Oklahoma Schools

The cost of Oklahoma’s tax break for horizontal drilling has skyrocketed, and it is draining funding from Oklahoma schools. 

By allowing the tax break to expire, more than $250 million could be made available to Oklahoma schools, enough to restore funding that was cut during the recession. Revenue from eliminating the tax break could boost school funding by as much as $370 per pupil this year.

HorizontalMainGraphic

Download a high resolution copy of the infographic here.

The Numbers

Oklahoma has traditionally taxed oil and gas production at 7 percent, but horizontal wells are currently taxed at just 1 percent for the first 4 years of production. The tax break for horizontal wells was created in the 1990s when this technology was experimental and risky. Now a large majority of new wells in Oklahoma are drilled horizontally, and as the result, the cost of the tax break has grown from $36 million in 2008 to $252 million this year. The tax break increased by $216 million over the same period that Oklahoma’s school funding formula was slashed by $213 million.

The tax break is scheduled to phase out next year, but executives for three of the largest oil companies in Oklahoma are pushing to make the tax break permanent at 2% for both horizontal and vertical wells.

Together Oklahoma has also made available a video summarizing the issue.

What does this mean for your school district?

Check out Together Oklahoma’s district fact sheets to find out exactly how much ending the tax break for horizontal drilling could benefit your school district in total and per pupil funding.

After you check out the data, call your elected officials today and tell them it’s time to tax horizontal drilling fairly. You can look up your legislators’ contact information here and find a fact sheet with suggested talking points here. You can also call the Capitol switchboard and ask to be connected to your legislators:

  • Reach your State Representative at (405) 521-2711 or 1-800-522-8502
  • Reach your State Senator at (405) 524-0126 or 1-800-865-6490

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ABOUT THE AUTHOR

Gene Perry worked for OK Policy from 2011 to 2019. He is a native Oklahoman and a citizen of the Cherokee Nation. He graduated from the University of Oklahoma with a B.A. in history and an M.A. in journalism.

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