Texas Oil & Gas Association (TXOGA) released data earlier this year in its Annual Energy & Economic Impact Report showing that the Texas oil and natural gas industry paid $24.7 billion in state and local taxes and state royalties — by far the highest total in Texas history, shattering the previous record of just over $16 billion set in 2019 by 54%.
“The Texas oil and gas industry plays an extraordinary role in securing our state and national economy and advancing global stability. However, policies and politics in Texas and across our nation will determine if we can continue to deliver for Texans while meeting our nation and the world’s energy needs,” TXOGA President Todd Staples said.
$24.7 billion translates to roughly $67 million every day, which pays for Texas’ public schools, universities, roads, first responders and other essential services. Production taxes and royalties to state funds more than doubled over fiscal year (FY) 2021. Production taxes grew by $5.8 billion, a 116% increase, and royalties to state funds increased by $2.2 billion, a 102% increase. Oil and gas production taxes exceeded $10 billion for the first time in Texas history.
In a recent media briefing, Staples detailed how oil and gas tax and royalty revenue is used to support education, transportation, healthcare and infrastructure, both locally in communities across Texas and through royalty and tax revenue that is paid into the Economic Stabilization Fund (Rainy Day Fund), the Permanent School Fund (PSF) and the Permanent University Fund (PUF) — all of which are funded almost exclusively with taxes and state royalties paid by the oil and natural gas industry.
In 2022, 99% of the state’s oil and natural gas royalties were deposited into the PSF and PUF. Each fund received $2.1 billion — more than double the amounts from 2021. The Rainy Day Fund received $1.5 billion from oil and natural gas production taxes. The value of these two funds now stands at an estimated $56.8 billion and $28.8 billion, respectively.
In FY 2022, Texas school districts received $1.65 billion in property taxes from mineral properties producing oil and natural gas, pipelines and gas utilities. Counties received $608.6 million in these property taxes.
Since 2007, when TXOGA first started compiling this data, the Texas oil and natural gas industry has paid more than $203.4 billion in state and local taxes and state royalties, a figure that does not include the hundreds of billions of dollars in payroll for some of the highest paying jobs in the state, taxes paid on office buildings and personal property and the enormous economic ripple effect that benefits other sectors of the economy.
In 2022, the industry employed 443,000 Texans who earned an average of $115,300 each — roughly 40% higher than the average pay in other private sectors. And for every direct job in the industry, conservative estimates indicate that an additional 2.2 indirect jobs are created. In total, 1.4 million Texans’ jobs are ultimately derived from the state’s oil and natural gas industry.
“No nation is doing more to protect and improve the environment than the U.S., with the oil and natural gas industry leading the way through investment in innovation.”
In addition to its economic impact for Texas, Staples described the industry’s contribution to global stability. “Our allies are literally knocking at our door because of their energy needs, and Texas’ oil and gas producers, pipelines, refiners and exporters are playing an essential role in delivering energy stability.”
In describing TXOGA’s priorities for the 88th Legislative Session, Staples said, “A bright future is Texas’ to lose. We can continue to outpace other states and even countries with economic opportunity, job growth and capital investment, or we can forfeit the game by sitting some of our best players on the sidelines.”
He added, “We need a policy framework that allows Texas to lead in carbon capture, electricity market redesign and policies to fund our key regulatory agencies. Alternatively, we need protection against policy that would adversely impact this industry’s contributions to a better future. We look forward to working with our lawmakers as they embrace the advancement of our state’s energy leadership.”
For more information, visit txoga.org.