Colorado increases tax on oil and gas operators to fund a $3.4 million shortfall in regulators’ budget
The drilling industry supported the move after the Colorado Oil and Gas Conservation Commission opted not to increase the tax by a larger margin
The Colorado Oil and Gas Conservation Commission on Tuesday raised the tax it levies on oil and gas production in the state to fill a $3.4 million hole created by declining commodity prices – with the support of both industry and environmental groups.
The support on the part of industry was the product of the commission deciding to reduce the size of the new levy as a result of improving oil and gas prices.
Scaling back the increase was “a move in the right direction,” and offered “breathing room for the industry,” said Rich Coolidge, director of regulatory affairs for the Colorado Oil and Gas Association, a major trade group.
Matt Jones, a Boulder County Commissioner, however, urged the new, seven-member, full-time commission to press for the full increase in the production tax in order to fulfill the agency’s new mandate to protect public health, safety, welfare and the environment.
“This is your inaugural vote,” Jones said. “You will send a message.”
And while environmental groups and industry representatives agreed on this tax increase, both sides also staked out positions on future budget and fee battles at the commission.
The oil and gas industry has been hit with low prices and, as a result of the novel coronavirus pandemic, depressed demand leading to losses and precarious finances. Two Colorado operators – Whiting Petroleum and Extraction Oil & Gas – have already filed for bankruptcy protection.
That downturn is also affecting the COGCC’s budget.
The agency is funded by a tax on oil and gas production, fines, permit fees and severance tax money. It does not receive any money from the state’s general fund.
As the COGCC’s mandate and regulations have expanded so has its budget, which was $10.6 million in 2017 and is projected to be $20.1 million in 2021.
To read the rest of the Colorado Sun article, click here.
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