Foster Campbell
Guest Columnist.......................................Published: Friday, November 4, 2011 at 9:32 a.m.
Guest Columnist.......................................Published: Friday, November 4, 2011 at 9:32 a.m.
Imagine you could turn back the clock to 1921.
That year Louisiana adopted its method for taxing oil and gas. It’s a method that, by and large, is still in use today.
In 1921, a loaf of bread cost 12 cents, gas was 10 cents a gallon and a Ford Model T cost $290.
Louisiana was in an oil and gas boom.
Wells were gushing oil and refineries and pipelines were being built to develop this new resource.
State and industry officials conceived a ‘severance’ tax to capture some of this newfound wealth in support of state government.
At the time, 90 percent of the oil and gas that traveled through Louisiana was produced in our state, and the severance tax targeted this production — and only this production.
Today, more than 90 percent of the oil and gas processed in Louisiana comes from other states, foreign countries and the Gulf of Mexico.
Yet we still tax only in-state production.
The vast quantities of oil and gas imported into Louisiana for processing go untouched.
Why does Louisiana rely on a 1921 tax system?
I have asked that question since the 1990s, first as a state senator and now as public service commissioner.
The answer from the industry is that the oil companies will leave Louisiana if it changes how it taxes oil and gas.
Leave Louisiana?
Can oil companies move the Mississippi River that carries the giant tankers to Baton Rouge?
Can they relocate their refineries between Baton Rouge and New Orleans?
Can they rip up 40,000 miles of pipeline