By: Janelle Stecklein – Claremore Daily Progress – Oklahoma’s coffers are reaping the benefits of soaring oil and gas prices, bringing in a record-breaking $171.2 million in gross production tax revenues in just a month.
That June 2022 total was the most ever in a single month, Oklahoma State Treasurer Randy McDaniel announced Wednesday. He said those numbers were based on April’s production when crude oil averaged $101.78 per barrel and natural gas was selling for an average of $6.60 per million BTU.
Oil and gas gross production taxes, meanwhile, topped $1.5 billion in the fiscal year 2022, which ended June 30. That’s the highest 12-month total for the tax in state history, McDaniel said.
Tax collections overall for the fiscal year 2022 were up by 15% from the year prior, McDaniel said.
Oklahoma’s unemployment rate ticked upward slightly from 2.7% to 2.8%, but still remained below the national average of 3.6%, according to the U.S. Bureau of Labor Statistics.
“Inflationary forces are a significant concern for consumers, but Oklahoma’s macro economy is benefitting from current energy prices and low unemployment,” McDaniel said in a statement. “Economic activity remains strong as reflected in sales and use tax receipts.”
Brook Simmons, president of The Petroleum Alliance of Oklahoma, said he’s not necessarily surprised that the oil and gas industry has had a record-breaking month, given the high commodity prices in the first part of the year.
“If the prices are higher, you’re going to drive additional money into the state’s coffers,” he said.
Simmons said Oklahoma has a highly specialized oil and natural gas economy, and success in the industry means not only additional tax revenue, but also more jobs, and increased financial success for “Main Street businesses” like grocers, barbers, car dealers, and machine shops as well as more money for schools, roads, bridges, and other public priorities.
“They are working very carefully to produce as much as they possibly can deliver for the consumer,” Simmons said of Oklahoma producers.
But Simmons said though Oklahoma’s production has increased it still lags behind that of neighbors Texas and New Mexico. Oklahoma producers are being “disciplined in their approach” amid concerns about “headwinds out there,” including inflation, labor and supply chain disruptions, the threat of a recession, and the national security risks associated with the Ukrainian war in Europe. There’s also uncertainty about how long high prices will last, he said.
“This is an opportunity for oil and gas producers of every size in the state of Oklahoma to do better right now, and to put some hay in the barn to get you through the lean times,” Simmons said.
U.S. President Joe Biden, meanwhile, has remained critical of the profits oil and gas businesses are making even while consumers face high prices at the pump. He’s urged them to produce more.
The average Oklahoma gas price Wednesday hovered around $4.50 per gallon, according to AAA; the national average per gallon was about $4.78, the group said.
Simmons said Biden’s position is “a ridiculous attack” made by someone who clearly doesn’t understand the value of the U.S. oil and gas industry. He said Biden’s own decisions have driven gas prices higher and created “the pain” consumers are feeling across the country.
He said the solution is to produce more U.S. oil and natural gas.
“The world economy wants to grow,” Simmons said. “The U.S. economy wants to grow, but we do not have enough oil and natural gas being produced right now to lower those prices. At some point, there will be a correction, supply and demand will come more into balance.”