The Marcellus and Utica shale formations, which lie, in part, under the hills of eastern Ohio, are two of the most important sources of natural gas in the United States. Since the rise of hydraulic fracturing (also called “hydraulic fracturing”) in 2010, more than 40 billion dollars a value of natural gas has been extracted from the Ohio shale fields.

However, the incredible wealth that has been created from state resources and the use of state infrastructure has largely benefited a few rather large pockets. Expanding oil and gas production is blocking future greenhouse gas emissions at a time when the need to mitigate our contributions to climate change is more urgent than ever.

If Ohio policymakers refuse to embrace safer energy technologies, they should at least ensure that oil and gas extraction increases the shared prosperity of the people of Ohio rather than fueling short-term private gains.

It’s time for Ohio’s oil and gas drilling companies to pay their fair share. Ohio still has a lot of untapped reservations hydrocarbons and their extraction should be subject to a separation tax at the level of other major oil and gas producing states.

A fair state-level layoff tax would help ensure that Ohio’s hydrocarbon development funds essential public services that meet the urgent needs of all Ohioans and the prospects of their children. In addition, a permanent severance tax fund – sometimes referred to as a legacy fund – like those in other gas-producing states and tribal nations, would go a long way towards a prosperous Ohio beyond the ups and downs of the United States. boom in hydraulic fracturing.

A permanent fund produces a sustainable investment endowment that generates interest income that can be used to finance the needs of a region or state.

Over the years there has been several attempts to legislate a fair termination tax in Ohio. In 2015, Republican Governor John Kasich offers a 6.5% departure tax on gas and oil production and a 4.5% tax on natural gas liquids.

Years earlier, Ohio Policy Matters offers a fixed 5% departure tax on gas and oil and, after certain trigger points, a 2.5% fee to a legacy fund that could offer long-term benefits despite volatility in the oil and gas markets gas. However, after a aggressive lobbying campaign from Ohio Oil and Gas Association and the American Petroleum Institute, lawmakers refused to act.

Ohio Drilling Operators To pay a penny per barrel of crude oil and a half nickel per thousand cubic feet of natural gas. This is one of the lowest severance pay in the country and that means years of oil and gas production have enriched companies and drillers, but not the communities that host them or the state that supports them.

The promises made by the oil and gas companies never materialized, and the counties in the Appalachian Mountains that were supposed to thrive became impoverished. According to a recent Ohio River Valley Institute Report, between 2008 and 2019, gas-producing counties (Belmont, Carroll, Guernsey, Harrison, Jefferson, Monroe and Noble) experienced a net job loss of 8%, personal income growth was below national averages and national, and the population has declined by more than 5%.

These statistics are only scratching the surface the surface negative local impacts who ravaged eastern Ohio in the last decade. All this while the same counties have grown, in terms of GDP, five times faster than the state of Ohio and four times faster than the nation as a whole. In other words, Ohio’s gas-producing counties are being drained of both their natural resources and their economic vitality.

What if the General Assembly had instituted one of the many severance tax proposals since 2010 – say, the one proposed by Policy Matters? Based on Ohio Department of Natural Resources data, a 5% fixed severance package on crude oil and natural gas dating back to 2016 would have generated more than $ 1.5 billion in revenue, or $ 1.244 billion more than the current severance package.

Had Ohio instituted a 2.5% fee for a legacy fund in the peak years of 2016-2020, the state would have had a fund of more than $ 760 million in compound interest and promising a source revenue for the future, beyond the boom in hydraulic fracturing.

Importantly, these funds could help more students pay for college and more working parents pay for the high cost of childcare, help fund the new fair funding scheme for schools, and start paying. for desperately needed infrastructure, housing and economic development in affected communities in eastern Ohio.

Ohio needs a fair severance pay tax. Companies that have had the opportunity to exploit Ohio’s limited natural resources should not be allowed to extract wealth from Ohio’s land and make heavy use of its infrastructure without compensating its residents.

The expenses listed above are just a small sample of the many pressing needs this could be resolved with severance pay. A severance package and a well-managed permanent fund could serve Ohio families for generations to come.

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Originally from Uruguay, Guillermo Bervejillo holds a doctorate. in Economic Geography and a BA in Economics from Ohio State University as well as an MA in Geography from the University of British Columbia in Vancouver. He studied antitrust economics, China-Latin America trade, the geopolitics of global soybean markets, and the academic publishing industry. Guille also has a long-standing commitment to community organizing in Ohio and work experience in Washington, DC. He was a founding member, organizer and researcher of our partner, the Ohio Student Association. In Washington DC, Guille was an economic policy intern at the Center for American Progress and an economic research analyst in the antitrust division of the US Department of Justice.

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