Sean W. Moran, co-chair of Buchanan Ingersoll & Rooney’s Energy Section, was quoted in a recent article in Columbus Business First regarding severance taxes and impact fees affecting oil and gas companies that drill in Ohio. The article, “Drillers warn tax hikes could bust projected boom,” described an impact fee that John Kasisch, governor of Ohio, proposes to impose on drilling companies. Drilling companies argue that this tax will discourage drillers from operating in Ohio and that it will damage economic opportunities in the state.
Ohio currently does not have an impact fee, although it does impose a 3 cent severance tax on every 1,000 cubic square feet of natural gas production.
As Moran described, energy companies consider more than just severance taxes and impact fees to decide whether they should invest in new wells. They also consider income taxes, property taxes and the cost of compliance with state regulations.
“The question they ask is, ‘Can we effectively operate there?’” he said. In particular, as states tax oil and gas companies in many different ways, it is often very challenging to compare the tax structures to each other.