Texas Oil and Natural Gas Drive 10 Percent Increase in State Sales Tax Revenue
Tue, October 10, 2017
Over the past year, state tax revenue from both oil and natural gas development greatly increased. According to the Comptroller data, revenue from the oil production tax grew by approximately 17.4 percent year over year, totaling more than $184 million last month. Revenue growth from natural gas production is equally impressive, as the data show natural gas production tax revenue skyrocketed by nearly 85 percent year over year, totaling over $109 million in September.
All told, the oil and natural gas industry generated over $293 million in tax revenue from production alone last month – that’s a 35.8 percent increase from September 2016.
In addition to making up a large portion of state tax revenue through production taxes, oil and gas development also spurred substantial growth in overall sale tax revenue. As Texas Comptroller Glenn Hegar stated in a press release:
“The double-digit growth in sales tax revenue was due to increased spending in the oil- and natural gas-related sectors.”
Such a large increase in tax revenue generated from both sales and production in oil and gas-related sectors is indicative of the growth Texas is still experiencing thanks to advancements in shale development.
According to the U.S. Energy Information Administration (EIA), oil production in the Permian grew from about 1.97 million barrels per day (bpd) in September 2016 to 2.58 million bpd this year – an over 30 percent increase, year over year. Natural gas production from the Permian also increased significantly, growing over 25 percent from about 6.86 billion cubic feet per day (Bcf/d) in September 2016 to over 8.56 Bcf/d in September of this year.
The Eagle Ford in South Texas saw production growth over the past year as well. According to EIA, the Eagle Ford produced about 5.75 Bcf/d of natural gas, along with just over 1 million bpd of oil, in September 2016. Production for both grew to over 6.18 Bcf/d of natural gas and 1.28 million bpd of oil by September 2017, a more than 7 percent and about 25 percent increase, respectively.
As Texas remains a leader in oil and gas production, the state benefits not only from improved energy security but also by having a growing source of vital state revenue to help fund schools and communities.