IO Says Ohioans Should Get “Fair Share” Of Fracking Benefits

For Immediate Release:  February 2, 2012
Contact: Dale Butland, 614-783-5833

IO Says Ohioans Should Get “Fair Share” Of Fracking Benefits
Think Tank Proposes “Windfall Profits Tax” on Oil and Gas Companies, “Hire Ohio” Policy and “Landowner Bill of Rights”

 

Columbus: Innovation Ohio, a progressive think tank headquartered in Columbus, today released a major report entitled “Fracking, Fairness and the Future” which calls on Gov. Kasich and state lawmakers to ensure that Ohio workers, landowners and taxpayers receive “a fair share and a fair shake” if the state decides to allow expanded drilling for gas and oil via a controversial technique known as hydraulic fracturing, or “fracking.”  Click here to read the report.

Though a “shale boom” potentially could bring tens of thousands of jobs to Ohio, environmental concerns, including a series of earthquakes near Youngstown, have raised doubts about whether fracking and its associated processes (including waste water disposal) are safe.  While the state investigates, Gov. Kasich reportedly intends to highlight the economic benefits of fracking during his February 7 “State of the State” address in Steubenville.

Environmental issues are not the primary focus of this report. Because “creating jobs will do little good if we poison our people and destroy our state,” IO believes it is self-evident that fracking should be halted if threats to public health and safety cannot be resolved.

But if fracking does go forward, IO believes “the economic benefits should be shared fairly with ALL Ohioans, not transferred out of state or allowed to flow down a one-way street in the direction of Big Oil.”

Among the report’s key findings are:

  • After analyzing oil and gas reserve estimates from both industry sources and the Ohio Department of Natural Resources, IO projects that an all-out shale boom could mean $86 billion in natural gas revenue for the developers over the next 20 years. There also is estimated to be between $130 billion and $550 billion worth of oil in Ohio’s shale and an unspecified amount of additional value in natural gas liquids. Yet Ohio currently has the second lowest oil and gas severance tax in the nation and levies no tax at all on the extraction of valuable natural gas liquids.
  • Though oil and gas companies are already signing hundreds, if not thousands, of mineral rights leases with Ohio farmers and landowners, the New York Times and other publications have found that such purchases in other states have resulted in unsuspecting landowners being taken advantage of by unscrupulous companies and “landmen.”
  • While the centerpiece of the industry’s effort to sell fracking is the promise of tens of thousands of new jobs, there is currently no guarantee that these jobs will go to Ohioans.  Indeed, anecdotal reports from areas where wells are already operating indicate that jobs often go to “experienced” workers from states like Texas and Louisiana.

Accordingly, the IO report makes three major policy proposals:

1)     A “Landowner Bill of Rights,” enforced by the Ohio Attorney General, to ensure Ohioans selling mineral rights are not cheated, kept in the dark about what chemicals or other hazardous materials will be used on their property, or left with polluted drinking water, despoiled acreage or unrepaired damages to access roads and other property.

2)    A reasonable “Windfall Profits Tax”on oil and gas companies. Raising Ohio’s oil and gas severance tax rates to those of Texas (7.5% on natural gas and 4.6% on oil and natural gas liquids), would raise nearly $2.5 billion from the extraction of natural gas over 10 years and could result in additional tax collections of $5.9 to $25.3 billion on the oil believed to be trapped in Ohio’s shale. Moreover, our proposal applies Ohio’s severance tax to natural gas liquids such as propane and butane, ensuring that Ohioans capture a portion of the value of all materials now attracting the attention of drillers. In addition to covering the increased regulatory and infrastructure costs associated with fracking, this revenue could be used to replace some of the money school districts and local governments lost to state budget cuts.  Such “taxpayer relief” would help keep many teachers and public safety workers on the job and off the unemployment rolls.

3)    A “Hire Ohio” policy designed to ensure that Ohio fracking jobs go mostly to Ohioans, rather than workers from other states.  Such a policy might entail a tax break for companies hiring a specified percentage of Ohioans, or incentives for companies that establish their own training programs and then employ Ohio workers who graduate.  Ohioans need jobs NOW and companies should be encouraged to hire them on the front end of a fracking operation, not months or years after a project has begun.

Said IO Communications Director Dale Butland:

“If fracking goes forward in this state, ALL Ohioans should benefit.  After all, these natural resources belong to us, not the oil companies.  The companies are certainly entitled to a fair profit for extracting it.  But regular Ohioans also deserve a fair share and a fair shake, and it’s up to our elected officials to make sure we get it.”

(Note: the IO website additionally now features a “Fracking Resources” page containing links to all source materials cited in this Report, other relevant websites, and an exclusive, interactive Ohio map showing all fracking site locations.  The page will be updated periodically and can be accessed at www.innovationohio.org/fracking)

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