By Brook A. Simmons
Summertime tax receipts have again shined a light on the important role oil and natural gas plays in Oklahoma’s economy.
In June, state Treasurer Randy McDaniel announced that May gross production taxes had reached a one-month high, totaling $171 million. The next month, he did the same, when June GPT receipts surpassed $187 million. In July, history repeated itself for the third time, with GPT collections raking in more than $205 million for the month, setting a new record once again. August was another $205 million GPT month.
Meanwhile, oil and natural gas activity continued to lift Oklahoma’s other non-federal revenue streams, especially income tax collections and sales and use tax collections as business activity and hiring increased.
Oklahomans are no strangers to the ups and downs of commodity markets. Our state economy is built on natural resources and the producers of those resources have no say in what those products bring at market – just like farmers and ranchers.
Take for instance natural gas. In 2007, when natural gas prices stayed well above the $6 mark for the majority of the year, the state collected $770 million from the taxes on its production. In 2016, when natural gas prices fell below the $2 mark for six months of the year, state taxes collected were just $138 million.
Now, driven by Russia’s attempt to divide and freeze a Europe trapped by its own anti-fossil fuel ambitions, natural gas is trading at $7 and has been above the $7 mark since the end of April.
Oil and natural gas, the tax revenue they generate, and the jobs needed to produce them have shielded Oklahoma from the economic malaise seen in other parts of the country. While the rest of the nation has slowed its post-pandemic economic growth, Oklahoma’s is accelerating, especially in the state’s two largest cities.
In the Oklahoma City metro area, job growth accelerated from 2.7% a year ago to 4.5% currently according to a new analysis from RegionTrack, Inc. The boost in hiring is even more pronounced in Tulsa, which more than doubled from 1.7% a year ago to 4.6% currently. It is no coincidence that those two cities combined likely trail only Houston for the highest concentration of oil and gas professionals on the planet.
Oklahoma has a highly specialized economy and the oil and natural gas industry is the bedrock of our state’s economic success today and far into the future.
— Brook A. Simmons is president of The Petroleum Alliance of Oklahoma.