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State Taxation, Exploration, and Production in the U.S. Oil Industry

Author

Listed:
  • Mitch Kunce
  • Shelby Gerking
  • William Morgan
  • Ryan Maddux

Abstract

How do firms in nonrenewable resource industries respond to changes in state taxes? This paper presents simulations of changes in state production (severance) tax policy on the timing of exploration and output in Wyoming. The framework developed allows for interactions between taxes levied by different levels of government. Results suggest that oil production is highly inelastic with respect to changes in production taxes. Policy implications suggest that increases in production taxes on oil risk little loss in future production. The extent to which these results may generalize to other oil producing states is considered. JEL Codes: H71, Q32

Suggested Citation

  • Mitch Kunce & Shelby Gerking & William Morgan & Ryan Maddux, 2003. "State Taxation, Exploration, and Production in the U.S. Oil Industry," Journal of Regional Science, Wiley Blackwell, vol. 43(4), pages 749-770, November.
    • Handle: RePEc:bla:jregsc:v:43:y:2003:i:4:p:749-770
    DOI: 10.1111/j.0022-4146.2003.00319.x
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    Citations

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    Cited by:

    1. Weber, Jeremy G. & Wang, Yongsheng & Chomas, Maxwell, 2016. "A quantitative description of state-level taxation of oil and gas production in the continental U.S," Energy Policy, Elsevier, vol. 96(C), pages 289-301.
    2. Katie Jo Black & Shawn J. McCoy & Jeremy G. Weber, 2018. "When Externalities Are Taxed: The Effects and Incidence of Pennsylvania’s Impact Fee on Shale Gas Wells," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(1), pages 107-153.
    3. Hoy, Kyle A. & Wrenn, Douglas H., 2018. "Unconventional energy, taxation, and interstate welfare: An analysis of Pennsylvania's severance tax policy," Energy Economics, Elsevier, vol. 73(C), pages 53-65.
    4. Timothy W. Kelsey & Mark D. Partridge & Nancy E. White, 2016. "Unconventional Gas and Oil Development in the United States: Economic Experience and Policy Issues," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(2), pages 191-214.
    5. Reimer, Matthew N. & Guettabi, Mouhcine & Tanaka, Audrey-Loraine, 2017. "Short-run impacts of a severance tax change: Evidence from Alaska," Energy Policy, Elsevier, vol. 107(C), pages 448-458.
    6. Carpenter, Craig Wesley & Anderson, David & Dudensing, Rebekka, 2019. "The Texas Drilling Boom and Local Human Capital Investment," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 51(2), pages 199-218, May.
    7. Hoy, Kyle A., 2023. "Asymmetric responses to severance tax changes: Coal production in West Virginia," Energy Economics, Elsevier, vol. 125(C).

    More about this item

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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