With global temperature is increasing and emissions from all industries To further complicate matters, many states are looking for ways to limit their dependence on fossil fuels. But while an axis for greener traffic and more environmentally friendly energy sources that can prevent climate change, a few discuss other issues we may face with this switch. Specifically, who can pay the taxes that we may one day lose from oil and gas?
The current, one New York Times report investigated the financial impacts on states and counties closely linked to major oil. In particular, it looked at the loss in revenue regions could face if they tried to sever ties with oil and gas production. Follow NYT:
“Across the United States, dozens of states and communities rely on fossil fuels to fund aspects of everyday life. In Wyoming, more than half of state and local tax revenue comes from fossil fuels. In New Mexico, the oil boom funded free universities for the people and expanded medical care to new mothers. Oil and gas money is included in so many local budgets that it is hard to imagine a future without it.”
The article warns that cutting the country’s dependence on fossil fuels in the way necessary to limit climate change will lead to a two-thirds reduction in tax revenue by 2050. According to the report, the number This could be worth more than $20 billion.
To find out what this means for local communities, the report looked at changes seen in Taft, California. This town has had ties to the oil industry for decades and have witnessed firsthand the benefits that can come from having a booming oil industry on your doorstep. It says:
“Property taxes from the oil and gas fund and Taft’s well-kept parks and recreation centers. The local college built a new classroom and hired staff to teach anatomy with funding from Chevron. Millions of dollars in donations from oil companies support the Taft Institute of Petroleum Technology, a popular high school program where students study petroleum geology, drone flying, and research topics such as carbon dioxide recycling. ”
As produces 70% of California’s oilKern County, where Taft is located, is also largest supplier of wind and solar power. However, while we may celebrate this shift to greener sources of energy, the region’s accountants are starting to worry. That is because NYT reports that “renewables do not generate as much tax revenue as fossil fuels.”
As a result, lawmakers in the region are trying to block moves to limit drilling in the area. Even going so far as to support the plan to build 43,000 new wells instead of new restrictions for those who want to drill for oil.
But that won’t help the fact that oil production in the state is falling, in part due to the increasingly complex extraction process workers have to go through to try and get hold of their fluid stock. The Times explain:
“Even as Russia’s invasion of Ukraine sent oil prices soaring, crude production from fields in California continued to decline. Much of that decline is structural: The state’s production peaked in 1985 after decades of extraction, and the rest of the heavy oil required complex techniques like steam injection to extract.”
This slowdown has been harshly felt for county coffers as well as for oil companies’ profits.
Follow Times, oil tax revenue in the region reached $197 million in 2020. This helped fund schools, hospitals, law enforcement and other public services in Kern County. But “severe changes in oil prices” have led to cuts such as “reductions at fire stations and library closures.”
To make up for lost state revenue, residents agreed to increase sales taxes. Another solution, the lawmakers say, would be to “free up” gasoline producers on Taft, which they say would supplement the region’s budget while It also helps to curb the increase in gasoline prices.
But the future of the industry in the region remains in doubt. And Renee Hill, a resident that NYT spoke up in the article, alarmingly summarizing the town’s worries.
“Oil supports all we have,” she told the paper. “If the oil disappears, we don’t have anything else left.”