Thursday, June 05, 2008


Suppose you could live in a state that had no income tax, no sales tax, yet fully funded just about every scheme of government, and in addition, provided every household in the state an annual check of up to $10,000. Oh, and lower gas prices to around $2 per gallon. Sounds too good to be true? Except that it could happen right here in Montana, thanks to the generous gift of the Bakken oil reserves.
With possible production of over 400 Billion barrels (Yes, that's a Billion times 400) of oil that can be extracted with existing technology, the potential for revenues from the royalties are huge. Just look at what Alaska did with the North Slope oil field royalties, and you can imagine the amount of wealth that could be used to help improve the lives of Montanans.
Now, if we just don't blow it. Looking at the map, it's obvious that the majority of the formation is located under North Dakota and Eastern Montana. Because the oil does not respect artificial boundaries, it would be entirely possible for North Dakota to completely sop up the entire field, including that under Montana, while we dither.
North Dakota already has an advantage, in that there is no business equipment tax on any of their oil production equipment. Montana on the other hand, does tax oil rigs, drills, pipelines, or, just about anything that it can. If you are a business, where would you rather operate?
The next legislature needs to remove the tax on oil production equipment and do everything that we can to help promote domestic energy production that is reliable. The benefits are too large to ignore, but there are those that will attempt to prevent the exploitation of this benefit for their own ideological reasons.
Those people need to be ignored for right now.

1 comment:

Anonymous said...

You are, of course, talking about federal and state royalties on all that oil, right? I mean, the oil revenue that goes into private hands mostly leaves the state, right? So you are in favor of one form of taxation - that of taking 1/8 of public land production for the public - right? Otherwise, we're like never gonna see $2.00 gas. Not that we will anyway.

Anyway, it's been my expereince that oil people drill where they think the oil is regardless of the tax structure, and that there are laws and regulations in place to prevent tapping into someone else's oil via drainage or directional drilling. (Reminds me - one of the reasons Iraq invaded Kuwait in 1990 - Kuwait was doing directional drilling into an oil field that straddles the border there.)

You just don't like taxes, but you don't much understand their use, either. Are you like Bush - you want to spend money but not do the tax to pay for it? That formula has about run its course.