CASPER, Wyo. (AP) - Wyoming Gov. Mark Gordon has approved a tax cut for oil and gas producers that would take effect if low prices for the commodities persist.
The cut Gordon signed into law Friday would go to into effect when average oil prices fall below $50 per barrel (0.14 metric tons) for at least a year. Gas prices would need to average under $2.95 per thousand cubic feet (1.1 million British thermal units).
In either case, severance taxes would be lowered from 6% to 4%.
Producers wouldn’t see a benefit until after the law goes into effect July 1, the Casper Star-Tribune reports.
Still, the measure is “the least we can do in the worst of times,” said Randall Luthi, Gordon’s energy adviser and a former director of the U.S. Minerals Management Service.
The 2% reduction applies for six months after a well goes into production, lowering to a 1% drop for six months after that. Taxes on a well’s production wouldn’t last longer than a year and the law will expire at the end of 2025.
U.S. oil prices have fallen by over two-thirds since the beginning of the year. The cut would reduce state revenue, critics of the bill said.
Lawmakers might have done even more for the oil and gas industry if the downturn had happened earlier, said Luthi.
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