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Taxing Fracking: The Politics of State Severance Taxes in the Shale Era

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  • Barry G. Rabe
  • Rachel L. Hampton

Abstract

States producing gas and oil have long levied severance taxes at the point of extraction, commonly placing most revenues into general funds. These taxes have assumed new meaning in many states amid the expansion of gas and oil production accompanying the advent of hydraulic fracturing. We reviewed all major statutes and constitutional amendments related to severance taxes that were enacted at the state level during the first decade of the “shale era” (2005–14). There have been only modest adjustments in statutory tax rates and some evidence that states have attempted to reduce these rates, possibly in response to growing national production. In turn, there is also evidence that states have begun to pursue more targeted strategies for revenue use, including some expanded focus on responding to the negative externalities linked to drilling, expanded revenue sharing with localities, and increased long-term protection of resources through state trust funds.

Suggested Citation

  • Barry G. Rabe & Rachel L. Hampton, 2015. "Taxing Fracking: The Politics of State Severance Taxes in the Shale Era," Review of Policy Research, Policy Studies Organization, vol. 32(4), pages 389-412, July.
    • Handle: RePEc:bla:revpol:v:32:y:2015:i:4:p:389-412
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    File URL: http://hdl.handle.net/10.1111/ropr.12127
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    Cited by:

    1. Steven Nelson & Jonathan M. Fisk, 2021. "End of the (Pipe)Line? Understanding how States Manage the Risks of Oil and Gas Wells," Review of Policy Research, Policy Studies Organization, vol. 38(2), pages 203-221, March.
    2. Fisk, Jonathan M. & Good, A.J., 2019. "Information booms and busts: Examining oil and gas disclosure policies across the states," Energy Policy, Elsevier, vol. 127(C), pages 374-381.
    3. Newell, Richard G. & Raimi, Daniel, 2018. "The fiscal impacts of increased U.S. oil and gas development on local governments," Energy Policy, Elsevier, vol. 117(C), pages 14-24.
    4. Brown, Jason P. & Maniloff, Peter & Manning, Dale T., 2020. "Spatially variable taxation and resource extraction: The impact of state oil taxes on drilling in the US," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    5. Neal D. Woods, 2021. "The State of State Environmental Policy Research: A Thirty‐Year Progress Report," Review of Policy Research, Policy Studies Organization, vol. 38(3), pages 347-369, May.
    6. Corey Young, 2023. "Between a Rock and a Hard Place: Governing Unconventional Natural Gas at the Local Level in the United States," Sustainability, MDPI, vol. 15(7), pages 1-14, March.
    7. Thomas, Pinky & Collins, Alan & Etienne, Xiaoli & Mugabe, Douglas, 2024. "Impacts of state tax and resource ownership policies on extraction: Evidence from U.S. natural gas production," Energy Economics, Elsevier, vol. 138(C).
    8. Centner, Terence J., 2016. "Reducing pollution at five critical points of shale gas production: Strategies and institutional responses," Energy Policy, Elsevier, vol. 94(C), pages 40-46.
    9. Trachtman, Samuel, 2020. "What drives climate policy adoption in the U.S. states?," Energy Policy, Elsevier, vol. 138(C).
    10. Gwen Arnold & Meghan Klasic & Madline Schomburg & Abigail York & Melissa Baum & Maia Cherin & Sydney Cliff & Parisa Kavousi & Alexandria Tillett Miller & Diana Shajari & Yuer Wang & Luigi Zialcita, 2022. "Boom, bust, action! How communities can cope with boom‐bust cycles in unconventional oil and gas development," Review of Policy Research, Policy Studies Organization, vol. 39(5), pages 541-569, September.
    11. Corey Young, 2023. "Employment and Income Effects of Investments Made Using the Act 13 Unconventional Natural Gas Impact Fee in Pennsylvania," Energies, MDPI, vol. 16(11), pages 1-11, May.

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