Letter: Hick severance policy wrong
I read recently that Governor Hickenlooper is touting a change to how severance taxes on oil and gas are collected in the state to cover a looming shortfall. How this would unfold still remains to be seen, but some of the whisperings involve decoupling the tax from the cost of oil, which would have a negative consequence not only for the oil and gas industry but for all Coloradans, as well.
The reason severance taxes are tied to the cost of oil seems intuitive enough — it’s similar to the price volatility of agricultural products — and decoupling the two could have a profound chilling effect on future oil and gas production.
Where do you think the companies will go in economic downtimes if one state has a percentage-based severance tax system versus a higher fixed cost in Colorado? Taking a problem and exacerbating it in this way seems terribly misguided.