A vote by an Oklahoma Senate panel to refund $150 million of an estimated $294 million in tax breaks denied to oil and gas drillers over the past two years is “counter productive” to the state’s efforts to improve its economy, according to the Oklahoma Independent Petroleum Association (OIPA).

The Senate Finance Committee approved legislation that would refund only about half the amount that horizontal and deep-well drillers are estimated to have foregone since agreeing to a deal during the state’s fiscal crisis in 2010.

“The oil and natural gas industry is, without a doubt, the driving force behind Oklahoma’s economy, and legislative efforts to cap tax provisions at a time when natural gas prices are low and trending lower is counter productive to helping our economy recover,” said OIPA President Mike Terry.

“Those efforts would also make Oklahoma the only state to impose a sizable tax increase on the oil and natural gas industry at a time when economic activity is most needed and energy independence weighs heavily in national energy discussions.”

The industry was responsible for the creation of nearly 15,000 jobs in Oklahoma last year, Terry said.

“The oil and natural gas industry produces for Oklahoma, accounting for approximately 25% of all taxes paid in the state when gross production taxes, income taxes, motor vehicle taxes, ad valorem taxes and other taxes and fees are considered. It is the engine that drives our state’s economy, and removing or limiting tax provisions for oil and natural gas exploration and production will only make us less competitive and slow our state’s push toward economic recovery,” he said.

When the state suspended tax breaks in 2010, it was estimated that $150 million would be due to drillers over a three year period beginning in 2012. But the Oklahoma Tax Commission last week estimated the actual amount lost by the industry since then at $294 million. The $144 million difference was created by a production boom in the state’s oil patch.

Finance Committee chairman Mike Mazzei (R-South Tulsa) told the Associated Press that the committee approved only $150 million in rebates because that amount was specified by the original agreement.

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