This is Todd Staples, president of the Texas Oil & Gas Association. Thank you all for joining TXOGA’s energy and economic impact announcement today. We will be discussing the industry’s continued and unmatched economic impact, environmental progress and the direct threats to the many contributions the oil and natural gas industry provides for Texas.
At the conclusion of our call we will be sharing a press release that includes a link to all the economic data I am about to share. As well as graphics for your use. I also want to acknowledge that winter preparedness is top of mind for many. I will have some comments on that topic as well.
As our nation continues its rebound from the lingering impact of the pandemic, this data confirms that reliable, affordable energy, fuels and products made by the oil and natural gas industry are central to the continued economic environmental progress.
Despite an incredibly difficult two years the Texas oil and natural gas industry contributed tremendously to state and local tax coffers, paying $15.8 billion in state and local taxes and state royalties in fiscal year 2021. This revenue from oil and natural gas production pipelines, refineries and LNG facilities translates to well over $43 million each and every day that pay for our schools, universities, roads, first responders and essential services.
Both state royalties and production taxes increased by more than 20 percent in fiscal year 2021 and production taxes exceeded $5 billion for only the third time in history. In 2021, 98 percent of the state’s oil and natural gas royalties were deposited into the Permanent School Fund and the Permanent University Fund, which support Texas public education. The Permanent Schools Fund received $1.1 billion and the Permanent University Fund received $979 million. Oil and natural gas royalties are the only source of fresh investment capital to these massive education endowments and have been for a century. The rainy day fund received $1.134 billion from oil and natural gas production taxes in fiscal year 2021.
Since 2007, when TXOGA first started compiling this data, the Texas oil and natural gas industry has paid more than $178.7 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. Nor does it include the taxes paid on office buildings and personal property and the enormous economic ripple effect that benefits other sectors of the economy.
In the economic impact report we will be sharing with you, there are several graphics that detail additional employment and economic information including the fact that more than 422,000 Texans have a direct job in the oil and natural gas industry, a number that rises to almost 1.4 million jobs when considering indirect benefits. When direct and indirect impacts are considered, the Texas oil and gas industry supported $344.1 billion, nearly 22 percent of the total private sector Texas gross state product in calendar year 2020.
In addition to this economic impact, unmatched investments by this industry have positioned the United States as the global leader in energy and environmental progress. Methane emissions are down dramatically, even as oil and natural gas production increases. The industry has a stated goal of eliminating routine flaring by 2030, with some operators having achieved that goal already. According to the Railroad Commission, the statewide flaring rate in Texas fell to a record low of 0.2 percent in October.
Texas has one of the lowest flaring rates of large oil and gas producing states in the country and issues like the Texas methane and flaring coalition and environmental partnership have brought operators together with a shared mission to reduce flaring and methane emissions even further.
The United States continues to lead the world in reducing carbon dioxide emissions thanks to expanded use of natural gas and power generation, policies that encourage responsible development of our natural resources, sharing of these resources with the world and global economic and environmental progress are proven and possible to coexist.
However, all of this progress is under assault. We cannot sacrifice energy freedom for energy independence. Squandering our nation’s energy might through misguided policy is a disservice to every American and a step in the wrong direction on the environment. We need to be producing and exporting more natural gas, not less, to provide other nations with lower emissions intensive energy resources, if the world is truly serious about climate progress. LNG, for example, is the answer to help our trade partners make environmental progress reliably, using today’s technology.
The best way to ensure Americans and our trade partners have access to clean, affordable and reliable energy is to encourage homegrown domestic energy, more LNG infrastructure, and more pipelines. Pleading with other nations to increase production to meet our energy needs is not the answer. It is imperative that we push back on policies that threaten this nation’s ability to prosper and remind our policymakers that no nation is doing more to protect and improve the environment than the United States, with the oil and natural gas industry leading the way through investment and innovation.
I do appreciate your time today and I do want to take your questions. I hope to maintain focus on our economic impact report but I understand some of you may want to discuss winter preparedness. I hope you visited our winter ready website for more information at txoga.org/winterready. What we know about the recent cold weather is that it was a non-event. Misreporting in recent days has led to misinformed conclusions and general confusion. Contrary to several media reports the decline in natural gas production was brief, minimal, within operational expectations and not a cause for alarm.
Editor’s Note: The above commentary was made by Todd Staples, president of the Texas Oil & Gas Association, on a webinar held to promote the group’s annual energy and economic impact report. Click here to read the report.
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