DALLAS — A poll conducted for the Oklahoma Policy Institute found that nearly two-thirds of the state's voters oppose continuing tax breaks for horizontal gas and oil drilling, the institute said.
Ending the severance tax break for the drilling method that uses hydraulic fracturing in shale formations is a popular idea across party lines, the institute reported, with a 73% of Democrats, 75% of independents and 51% of Republicans in favor. The process is commonly known as "fracking."
"Oklahoma voters of all stripes see that the tax break for horizontal drilling has become unnecessary and unaffordable," said David Blatt, executive director of Oklahoma Policy Institute, which commissioned Global Strategy Group to conduct the poll. "This giveaway is a major reason Oklahoma is facing budget shortfalls despite a strong national recovery and an energy boom. It's time to do away with it and restore funding for our schools, public safety and other important services for Oklahomans."
Oil and gas industry officials say the tax breaks are necessary to encourage exploration and production of new energy sources.
Oklahoma currently taxes horizontal wells at only 1% for the first 48 months of production, compared to 7% for traditional production. Typically, shale gas produced from horizontal wells falls dramatically after the first year. The tax break cost the state $164 million last year and is projected to increase to $251 million this year, the institute said.
State House Speaker T.W. Shannon, R-Lawton, authored legislation to make the tax breaks permanent. The tax breaks were passed in the 1990s as an incentive to develop the then-experimental drilling technique.
Shannon and oil and gas operators say lower taxes have encouraged drilling and helped create jobs.
"The current tax rate on horizontal drilling has been doing exactly what it was designed to do: encourage more drilling in Oklahoma," Shannon said in a prepared statement. "Therefore, I believe we should make this rate permanent and send the message that Oklahoma is a place that welcomes the oil and gas industry, along with the jobs and economic development they bring to our great state."
The poll also found that support for an income tax cut in Oklahoma is declining and that strong majorities of Oklahomans oppose a tax cut that will mean less funding for education and other services.
The poll was conducted among 610 voters registered in Oklahoma on March 3-6, 2014. The margin of error on the poll is plus or minus 4%, the institute said.
