The Louisiana legislative auditor said in a report that horizontal drilling for oil and gas cost the state over $1.1 billion in lost severance tax revenue due to the tax exemptions on such drilling for the years 2010 - 2014. The report also noted Louisiana was the only state that offered a severance tax suspension for horizontal drilling. The story was carried in a Times Picayune article of October 28.
This writer reported in a commentary long ago how the industry shifted its usual vertical drilling for natural gas where they have no exemption to horizontal drilling where they could claim the exemption. A double wammy to the state's budget because of the actions by the state legislature. Does any one really think the industry needs those exemptions in order to drill, produce and make a profit? They also have the cost of doing business as deductions.
The report also said because of changes made by the legislature recently the companies may not pay any taxes at all for the next 5 years because of the low price of oil and gas. The $8 billion of tax breaks and exemptions given business in Louisiana every year is a major reason why Louisiana and its citizens rank so low of the 50 states on the economic scale.
I wonder how many of Louisiana's uninsured could be insured with that $1.1 billion in revenue loss or how many other cuts in the budget could have been avoided. This should be a wake up call for all Louisiana voters.
This commentary written by Joe Lorio
