(The Center Square) – Production taxes paid by the Texas oil and natural gas industry topped $10 billion in fiscal 2022 – the highest amount the industry’s paid in Texas history.
The fiscal record was reported after the industry has broken records nearly every month this year in both the number of jobs added and the record amount of taxes paid.
According to the most recent data published by the state comptroller’s office, production taxes paid by the oil and natural gas industry totaled $10.83 billion for fiscal 2022.
Both oil and natural gas production taxes exceeded the annual revenue estimate prepared earlier this summer by the comptroller’s office.
Oil production tax revenue was $6.36 billion, up 84.4% from fiscal 2021. Natural gas production tax revenue was $4.47 billion, up 185% from fiscal 2021. Both totals exceeded their projected estimates by over $134 million and $9 million, respectively.
The industry paid 88% more in 2022 than it did during its previous highest year in 2014.
The record amount of taxes paid by the oil and natural gas industry fund two key expenses: the Economic Stabilization Fund (Rainy Day Fund) and State Highway Fund. The Rainy Day Fund has been used to fund public K-12 and higher education needs, retired teachers and state police funds, in addition to other services in Texas.
Within 90 days, the comptroller’s office says it will make two deposits of $3.64 billion into each fund as a direct result of the taxes paid by the Texas oil and gas industry. This is an increase of $1.46 billion deposited in each fund in November 2021.
“Oil and natural gas activity continues to pay big dividends for all Texans,” Todd Staples, president of the Texas Oil & Gas Association, said. “With all the good news and records set at this level of funding, it is hard to focus on one category but it truly is astounding to realize that a deposit of $3.64 billion will be made in both the ESF and SHF. Highway improvement is fundamental to continued driver safety and economic growth.
“It is good to know that oil and natural gas companies are using their recent success to fund more research and development, lower emissions technology, and add jobs for more Texans. We need to continue policies at both the state and federal level that unleash American energy leadership and ensure this production occurs here at home so that we do not become dependent on foreign countries for our basic energy needs.”
Production taxes are only one of many taxes the industry pays in addition to paying billions in property taxes on all assets, from producing minerals to pipelines to refineries and gas stations. The industry also pays billions in state and local sales taxes. The state’s franchise tax and gross receipts taxes imposed on natural gas utilities and pipelines also bring in millions to the state.
Taxes remitted to the state based on July sales and received in August also broke records.
Oil production taxes totaled $609 million in August, up 50% from August 2021. Natural gas production taxes totaled $525 million, up 144% from August 2021.
Comptroller Glenn Hegar said the record amount of state sales tax revenue received in August of $3.77 billion “came from receipts remitted by the oil and gas mining sector, which were up by nearly 80 percent compared with a year ago.”
August revenue totals outpaced the state’s most recent projection in its Certification Revenue Estimate by $841 million, Hegar said.
“To put it into perspective, only five times since 1988 has the rate of growth in Texas’ All Funds tax collections exceeded the prior fiscal year by double digits – and those increases ranged from 10 to 13 percent,” he said.
“This year’s rate of growth was almost double the previous high in that time. Over the last many months, economic growth and inflation have driven higher sales tax collections as demand remains strong and businesses and consumers continue to pay elevated prices for goods.”