Oil and Gas Revenue Allocation to Local Governments in Eight States

66 Pages Posted: 12 Oct 2015 Last revised: 23 Jan 2022

See all articles by Richard G. Newell

Richard G. Newell

Duke University - Nicholas School of Environment; National Bureau of Economic Research (NBER); Resources for the Future

Daniel Raimi

Duke University

Date Written: October 2015

Abstract

This report examines how oil and gas production generates revenue for local governments in eight states through four key mechanisms: (i) state taxes or fees on oil and gas production; (ii) local property taxes on oil and gas property; (iii) leasing of state-owned land; and (iv) leasing of federally-owned land. To compare across states, we show the percentage of total revenue generated by oil and gas production that flows to local governments from these revenue sources. We also connect these calculations to related research to assess whether state and local policies are providing sufficient revenue for local governments to manage increased costs associated with shale development. We find that in most cases, existing policies appear to provide adequate revenue for local governments to manage increased costs associated with growing oil and gas activity. As of 2014, revenues fall short of the costs imposed on local governments in some highly rural regions experiencing rapid, large-scale development, notably the Bakken region of North Dakota and Montana, select counties in Texas, and select local governments in Colorado and Wyoming. Collaboration between industry and local governments, especially on road repairs, could reduce public costs.

Suggested Citation

Newell, Richard G. and Raimi, Daniel, Oil and Gas Revenue Allocation to Local Governments in Eight States (October 2015). NBER Working Paper No. w21615, Available at SSRN: https://ssrn.com/abstract=2672729

Richard G. Newell (Contact Author)

Duke University - Nicholas School of Environment ( email )

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National Bureau of Economic Research (NBER) ( email )

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Resources for the Future ( email )

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Daniel Raimi

Duke University ( email )

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Durham, NC 27708-0204
United States

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