The House has voted to extend the so-called “small trigger” on oil taxes.
It’s a temporary oil extraction tax reduction, triggered when the price of a barrel of oil drops below $55 for a month. It lowers the extraction tax on new wells from 6.5 percent to 2 percent on the first 75,000 barrels produced, or the first $4.5 million of gross value. It kicked in February first, and expires June 30th. The House bill keeps it in place until June 30th, 2017.
Rep. Mark Owens (R-Grand Forks) says the exemption will cost the state treasury $170,000 per well in tax revenue. But he says there aren’t any estimates of how many wells this will affect. That caused Rep. Jon Nelson (R-Rugby) to raise a question.
"How did you come to this conclusion without having some idea of the number that we're looking at?" asked Nelson.
"The reason you have it is to entice drilling to continue, to keep some oil money coming to the state," replied Owens. "It's a cash-flow business. Without knowing how many wells will be drilled during that two year period, there's no way to estimate -- unless you have a crystal ball that tells us how many wells will be drilled. I would welcome that information."
The bill passed 79 to 14. It will now be considered by the Senate.
