Higher Taxes and Tougher Regulations for Oil Drillers – Governor Kasich
John Kasich, Ohio Governor is proposing changes in the way Ohio taxes and regulates oil and gas drilling companies. He wants a comprehensive energy strategy in the country starting with his home state.
Some of the proposed changes, which require approval from the legislature, include disclosure of chemicals used in fracking, higher tax rates for drillers, higher standards for sinking of wells, and new rules on gas gathering lines.
These proposals were released as part of a Mid Biennium Review. The governor also said that he wants a balance between policies that create new investments and jobs and those that protect the environment.
Kasich believes that Ohio can create policies that can be adopted throughout the country.
States like North Dakota, Pennsylvania and Ohio have been forced to review their policies regarding fracking, or hydraulic fracturing. While industry experts say that the method is safe, residents of these states have complained of contamination in their water sources.
Showing the Money
According to the governor’s office, drillers will be required to pay a severance tax of 4 percent, while income tax rates for small businesses and individuals will go down. If enacted into law, the proposals will allow the local government to collect 25,000 dollars for each well. This upfront fee will be used to cover the effects of drilling.
Oil and gas companies like Chesapeake Energy Corporation (CHK), Exxon Mobil Corp and Devon Energy Corp have already started sinking wells in Ohio’s Utica Shale which is estimated to have 15.7 trillion cubic ft of natural gas and five and half billion barrels of crude oil.
- Ohio Governor Leading With Drilling Taxes (2012tax.org)