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Another good year for Texas oil companies boosted state coffers in 2023, yielding a record $26.3 billion in taxes and state royalties.

Texas made record-breaking $26.3B in off oil and gas tax revenue last year

Another good year for Texas oil companies boosted state coffers in 2023, the oil and gas tax revenue yielding a record $26.3 billion in taxes and state royalties that fueled the state’s schools and county governments, according to figures released Tuesday by the Texas Oil and Gas Association.
The industry trade group said state revenues from oil and gas activities increased 6% in 2023 compared with the previous $24.7 billion record set in 2022, when oil prices soared after the start of the Ukraine war.
Russia’s invasion of Ukraine sparked energy shortages that drove up prices and prompted oil and gas companies in Texas to increase production, helping to deliver a second consecutive record-breaking year for state revenues tied to the industry.

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Monthly production totals in 2023 set records, TXOGA President Todd Staples said Tuesday during a news conference. The Texas industry produced 5.6 million barrels per day of crude oil in October, the state’s highest-ever monthly oil production.

“American energy leadership starts in Texas,” he said during the conference call. “Our nation, economy and our world are better because of the tremendous gains happening in Texas oil and natural gas.”

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Source: Houston Chronicle

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About $8.5 billion was deposited into two key state funds that wouldn’t exist without oil and natural gas production tax revenue.

$8.5 billion to highway, rainy day funds financed by Texas oil and gas industry

Two Key State Funds

About $8.5 billion was settle into two key state funds that wouldn’t exist without Texas oil and gas industry and production tax revenue, according to state data.

Texas Comptroller Glenn Hegar announced that his office transferred $3.06 billion into the State Highway Fund (SHF) and $5.46 billion to the Economic Stabilization Fund, otherwise known as the Rainy Day Fund.

The two funds normally receive the same amount of money from Texas oil and natural gas industry taxes. However, because another general revenue surplus was write down at the end of fiscal 2023 – after the industry paid record-breaking amounts in taxes – the Rainy Day Fund received $2.41 billion more because of constitutional requirements.

“The strong Texas economy and judicious budgeting by lawmakers netted a surplus that, for the first time in more than a decade, allows us to set aside an additional bucket of money to ensure we are able to weather future downturns,” Hegar said. “The Rainy Day and State Highway funds are tremendous assets for the taxpayers of Texas and help provide the foundation needed for the future of this great state.”

1987 Collections

The combined $6.11 billion severance tax transferred to the Rainy Day Fund and SHF are based on crude oil and natural gas production tax revenues in excess of 1987 collections, in accordance with state constitutional requirements. If either tax generates more revenue than the 1987 threshold, an amount equal to 75% of the excess is move, the comptroller said.

A Constitutional Amendment

In November 2014, voters passed a constitutional amendment requiring at least half of these severance taxes to be allocated to the Rainy Day Fund. The remainder is required to be allocated to the SHF to be used for non-toll highway construction, maintenance and right-of-way acquisition. Additionally, the Texas Constitution provides for a second transfer to the Rainy Day Fund equal to one-half of any unencumbered general revenue surplus at the end of each biennium. This year, an additional transfer of $2.41 billion of unobligated general revenue fund dollars went to the Rainy Day Fund, the comptroller said. The last time such a transfer occurred was in 2008.

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Source: The Center Square

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