$16.7 billion in 2013

Tax season is nearing a close for Americans, and earnings season is just around the corner for oil and gas companies preparing their quarterly results. E&Ps and service providers have felt the impact from the oil price slide, even though both spot prices closed about 5% higher today.

Those companies are not alone. The budgets of several hydrocarbon-producing states are also feeling the squeeze. Last month, the Energy Information Administration issued a report detailing the effects of lower realized commodity prices, claiming states like North Dakota, Texas and Alaska were losing hundreds of millions of dollars and adjusting their respective budgets.

But just how dependent are individual states on oil and gas production? Oil & Gas 360® compiled a list of ten of the greatest producing hydrocarbon states for our Chart of the Week. Each state’s various tax schemes work differently, but we compiled a list of severance tax revenue as a percentage of each state’s total tax return. Severance taxes include all nonrenewable resources, including coal, and were compiled by information from the United States Census.


*Note: Pennsylvania does not use a severance tax*

In all, the United States collected more than $16.7 billion in 2013 severance taxes. The top ten states listed above account for about 91% of the total – Texas and Alaska alone account for more than half of the collected revenue. Total severances tax revenues outpaced property taxes ($13.2 billion) and equaled more total taxes received by 30 of 50 states.

Total Severance Tax (in millions)
United States $16,774
Alaska $4,017
Colorado $147
Louisiana $834
Montana $282
New Mexico $843
North Dakota $2,457
Oklahoma $515
Texas $4,799
West Virginia $608
Wyoming $867

How Each State Collects and Allocates Taxes from Oil and Gas Production

The National Conference of State Legislatures completed an in-depth analysis of oil and gas production taxes in 2013 entitled “STATE REVENUES AND THE NATURAL GAS BOOM: AN ASSESSMENT OF STATE OIL AND GAS PRODUCTION TAXES.” The report breaks down state-by-state the various taxes levied on oil and gas producers in each state and how the revenue is allocated.  “Taxes on the Production and Severance of Oil and Gas and Tax Revenue Allocation” maybe be viewed here.

The pdf file of this analysis may be downloaded here.

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