Rep. Bill Patmon to fight infant mortality through the power of condescension

bill patmon planned parenthood
bill patmon planned parenthood

Bill Patmon announces his bill to defund Planned Parenthood in Ohio.

Last month, two seemingly unrelated reports came out. The first involved a series of leaked videos from an anti-abortion activist group that purported to show Planned Parenthood employees trying to sell the tissue and organs of aborted fetuses. The second was a report updating Ohio’s abysmal record on infant mortality rates. Now, at first glance, these two stories have nothing to do with one another. That is, unless you’re Representative Bill Patmon of Cleveland.

On July 28, Rep. Patmon stood on the steps of the Ohio Statehouse to announce that he had introduced House Bill 294, a bill that would bar the state from issuing state and certain federal funds from “any entity that performs or promotes elective abortions.” Apparently Rep. Patmon and his primary co-sponsor, Rep. Margaret Conditt (R-Liberty Township), decided that the controversy over the Planned Parenthood videos provided perfect cover for them to try and defund the organization in Ohio.

Now, in order for this bill to make any legal sense, Reps. Patmon and Conditt need for you to ignore a few details. Like the fact that Planned Parenthood devotes just 3% of its resources to performing abortion services. Or the fact that Ohio law already places Planned Parenthood at the end of the line for state funding. Or the fact that, under provisions in the Medicaid law, the state has no authority to bar patients from visiting the health care provider of their choice. But Rep. Patmon has never been one to let facts get in the way of a chance to preach at Ohioans.

But the truly galling part of this bill is the way that Reps. Patmon and Conditt are attempting to cloak it as a way to address Ohio’s infant mortality crisis. In an email to colleagues, the two claim that the funding taken from Planned Parenthood would be shifted to “empower groups who are committed to combating Ohio’s atrocious statistics [on infant mortality].”

As recent reports from the Ohio Department of Public Health and the U.S. Department of Health and Human Services show, the state ranks near the bottom – 45th out of 50 – when it comes to infant mortality rates. While Ohio’s infant mortality rate did decline somewhat in 2013 – down to 7.33 deaths per 1,000 live births from 7.6 in 2012 – it remains 21% above the national average of 5.96 deaths. The issue is drastically worse in Cuyahoga County, which had a rate of 8.9 deaths per 1,000 live births in 2013. For Cleveland, that number was a depressing 13.0 deaths in 2013. The 2012 rate for African Americans in Cleveland was even higher at 15.73 deaths per 1,000 live births, more than 2.5 times the national rate.

Of course, HB 294 will do absolutely nothing to address this ongoing issue. On the contrary, it could actually make the problem worse. As I noted, Planned Parenthood devotes just 3% of its resources to abortion. The other 97% goes towards a variety of other medical services, including sex ed, contraception, STD and HIV/AIDS testing and treatment, cancer screenings and referrals, pregnancy tests, and referrals for prenatal care for pregnant women. Planned Parenthood of Greater Ohio treated nearly 57,000 patients last year alone. Many of the patients who rely on Planned Parenthood’s services are low-income and have few other options. As Rep. Gretta Johnson (D-Akron) stated, “This legislation is a purely political maneuver that will further restrict access to necessary healthcare for Ohio’s women, particularly those who are economically disadvantaged and already struggling to meet their basic health needs.”

That Rep. Patmon would place his ideology above the interests of his constituents is hardly surprising. This is the same man who co-sponsored the “Ohio Religious Freedom Restoration Act” in 2013-2014, a bill that would have allowed business owners to discriminate against LGBT individuals on the basis of their religious beliefs. Patmon eventually backed down, but only after drawing intense criticism. So don’t fall for the (D) that comes after his name. Bill Patmon is a Democrat in the same way that Adam Sandler is funny – some people may have believed that back in the 90s, but we should all know better by now.

Rather than actually stand up for the interests of his constituents, Rep. Patmon is more interested in lecturing them. While announcing HB 294, Rep. Patmon had the nerve to attack African Americans in Northeast Ohio – the majority of people in his House district – for being concerned over excessive use of police force within their communities. “You hear a lot of demonstrations across the country now about Black Lives Matter,” he said. “Well, they skipped one place – they should be in front of Planned Parenthood.”

Perhaps Rep. Patmon has to use condescension to cover up the fact that he has done nothing to address the actual challenge of infant mortality within his district. Instead, he has consistently stood up for the interests of the fossil fuel industry to pollute poor and minority communities throughout the state. The third largest contributor to Rep. Patmon’s campaigns for the Statehouse has been FirstEnergy.  That’s the same FirstEnergy that operated the Lake Shore Power Plant on Cleveland’s east side for 104 years before it was forced to shut down this April in response to the Obama administration’s mercury regulations. That plant sits just upwind from much of Rep. Patmon’s district, including neighborhoods like University Circle and Kinsman that have infant mortality rates higher than Bangladesh, Haiti, North Korea, or Pakistan. In 2012, the NAACP ranked Lake Shore as the 6th worst coal plant in the country for environmental justice, given its high levels of pollution and proximity to tens of thousands of low-income persons of color.

Yet, if Rep. Patmon actually cared about infant mortality, as he claims, he would step up and tackle air pollution. A litany of studies have demonstrated a clear link between in utero and neonatal exposure to air pollution and a host of negative health outcomes, including low birth weight, preterm birth, and infant mortality. In a landmark 2003 study, researchers Kenneth Chay and Michael Greenstone explored the impacts of the decline in particulate matter pollution as a result of the 1980-1982 recession and changes in infant mortality rates. Their results were stunning. They found that the decline in air pollution was responsible for 80% of the total reduction in neonatal mortality in the United States during that period. In their conclusion, they state [FYI, TSP means total suspended particulates, another name for coarse particulate matter]:

We find that a 1 µg/m3 reduction in TSPs is associated with 4-7 fewer infant deaths per 100,000 live births at the county level…Most of these effects are driven by fewer deaths occurring within one month of birth, suggesting that fetal exposure during pregnancy is a biological pathway. Consistent with this, we find significant effects of TSPs reductions on deaths within 24 hours of birth and on infant birth weight. The analysis also reveals nonlinear effects of TSPs and large infant mortality effects at TSPs concentrations below the EPA-mandated air quality standard. Overall, the estimates imply that about 2,500 fewer infants died from 1980-82 than would have in the absence of the [10% reduction] in air pollution.

Additionally, multiple studies demonstrate that exposure to air pollution from natural gas extraction is linked to lower birth weight and higher rates of infant mortality. Despite this, Rep. Patmon was 1 of just 3 Democrats to vote for HB 483, which drastically increased the setback requirements for wind turbines in the state. This bill ensured that setbacks for wind turbines in Ohio are now up to 10 times greater than those for oil and gas wells. Patmon also cast the deciding vote to move HB 375, the pathetic House GOP severance tax bill for oil and gas extraction, out of committee; fortunately it died in the full House. His fealty to fossil fuels knows nearly no bound.

So it’s great that Rep. Bill Patmon has a new-found concern for Ohio’s infant mortality crisis. But perhaps he should spend more time addressing the actual causes of the issue and less time delivering morality lectures to this constituents.

Major questions remain over ‘FrackGate’ scandal after Kasich’s reversal

john kasich

This piece was written by Brian Kunkemoeller of the Sierra Club Ohio Chapter and cross-posted from Ecowatch

john kasich

Governor Kasich may have come out against fracking in Ohio’s state parks, but his actions have done little to qualm concerns about the state of environmental oversight in the state (courtesy of The Toledo Blade).

Ohio’s Gov. John Kasich reversed his position on fracking public lands in response to public outcry about the events surrounding recently released information about the state’s collusion with the oil and gas industry to conduct a shady pro-fracking PR campaign. Last week, Gov. Kasich announced that he is opposed to drilling in state parks, but the biggest concerns are still unanswered as a cloud of controversy still lingers.

“FrackGate”

In 2011, we watched as a state legislature seemingly smitten by the industry passed legislation opening public lands to fracking with handshakes and applause, despite polls showing that 70 percent of Ohioans were opposed. Ohio Sierra Club members and others had risen to the occasion by writing letters and giving testimony, but the Governor signed the bill into law, which at that time seemed to seal the fate for Ohio’s public lands.

In 2012, the Ohio Sierra Club filed the first of many open records requests to the Ohio Department of Natural Resources (ODNR) looking for e-mails between the agency and the industry and how the language of the public lands fracking bill was written. The agency didn’t respond, forcing our first lawsuit (and not our last) simply to obtain public records from the ODNR. One of the things we discovered in those e-mails was that the Ohio Oil and Gas Association had been one of a select few invited to make edits to the legislation as the bill was making its way into state law.

Late last year, amid silence from the administration on the status of opening public lands to horizontal fracking, Ohio Sierra Club filed another public request under Ohio records law. It was this request that yielded the now-famous collusion document as well as the e-mail invite from the Governor’s office that named several targets, including Robert F. Hagan (D-Youngstown), in what the state representative has since coined “frackgate.”

Stories about this will be written and re-written, as the depth of this story is only beginning to be seen. How far down the rabbit-hole the state administration has gone will always be a topic of speculation. Unless, of course, there is an investigation.

Ohio’s PR agenda

There is no question that ODNR is actively silencing and opposing Ohioans concerned about fracking. This is the same agency who recently ignored repeated requests by the citizens of Athens and county commissioners alike who were simply asking for a public hearing about proposed fracking waste disposal wells. The ODNR met citizens in Portage County with armed guards and dogs, giving a brief lecture about the history of oil and gas in Ohio and refusing to answer questions about the wells in question.

Most disturbing, citizens in Darke County (hometown of Director James Zehringer) held expert panel events about fracking, only to have handouts made by ODNR staff discrediting their information delivered to and distributed by the County Commissioners office. Ohio Rep. Jim Buchy (R-Greenville) even made a website that features videos of the ODNR staff discrediting the citizens’ concerns alongside Energy In Depth—the industry’s new pet PR firm.

How are public funds being used for these purposes? How much state officials’ staff time is being used to do PR, and by whom? What is the agency’s relationship with Halliburton, America’s Natural Gas Association and JobsOhio? When did the ODNR start working with Energy In Depth and what is their relationship?

Where does our state regulatory agency end, and the fracking industry they regulate begin?

State Reps. Hagan and Nickie J. Antonio (D-Lakewood) submitted a letter to Ohio House Speaker William Batchelder requesting legislative hearings and an investigation in to the ODNR’s agenda. If House Speaker Batchelder denies these requests, Ohioans will be forced to draw their own conclusions about whether or not the oil and gas industry has infiltrated the public process.

In fact, if there is no investigation, the public has every right to draw some very serious conclusions.

Kasich’s conundrum

The governor made stunning comments when he announced his reversal. First, that he didn’t believe that the “regulatory framework was mature enough” for fracking in parks. Second, this is why he never appointed the five-member Oil and Gas Leasing Commission before the deadline to approve public lands leases. (About that public lands leasing commission—the nominations were made by the Ohio Oil and Gas Association themselves during an e-mail exchange with the ODNR)

These are two very interesting statements.

One: if the regulatory framework is in fact not mature enough, then he apparently perceives that fracking isn’t safe enough for our public lands. The obvious question is: if it’s not safe enough for our public lands, is it safe enough for our communities? Does the governor agree that the ODNR seems incapable of regulating fracking and knows all too well about their sweetheart relationship with industry? Here’s the take from Sierra Club President David Scott:

“It seems Governor Kasich is coming to his senses after being caught up in the ongoing ‘FrackGate’ scandal. The governor now admits that the ‘regulatory structure’ is not ‘mature’ enough to allow fracking in Ohio’s parks. We agree. But the Sierra Club and our 2.4 million members and supporters understand that what is too dangerous for our parks is too dangerous for other public lands or our backyards. And everyone will agree that public officials shouldn’t be colluding with the oil and gas industry to force fracking down our throats.”

Two: is this actually about the severance tax? A Columbus Dispatch article earlier this week quotes Tom Stewart vice president of the Ohio Oil and Gas Association, “We would never compromise our position on the severance tax to get concessions on state land.” So, what Stewart is saying is that he’s not going to sue the governor for not making the appointments he wanted for the Ohio Oil and Gas leasing commission because he would rather pass a tax bill that the Ohio Oil and Gas Association admittedly wrote.

This is the real crux of the governor’s position. It explains why he’s holding off on making appointments to the leasing commission. It also explains why he left himself an out when he said he “holds the right to revisit” his opposition to fracking public lands. He’s using Ohio’s public lands as a bargaining chip.

Yes, it’s indeed a dubious business to dance with the fracking industry. Disclaimer: severance taxes on extractive industries aren’t necessarily a good thing.

So, what’s all of this severance tax business about anyway? Well, it’s actually really important and it’s become a very serious problem for the governor, though no one seems to be talking about how FrackGate and the severance tax are very much connected (except for Tim Kovach).

While already fighting an uphill battle to show job growth from fracking is anywhere near par with projections—Kasich is being outright stifled in his efforts to draw even a modest tax on the industry and follow through on his promises for Ohioans to actually benefit from fracking. Disaster struck for Kasich when Speaker of the House William Batchelder soundly defeated the Governor’s severance tax proposal that would have lowered income taxes for Ohioans and at least partially resolved significant questions about Ohio’s budget. All of that despite the fact that the Governor’s bill would have kept Ohio’s fracking tax among the lowest in the nation.

Batchelder immediately came back with Ohio Oil and Gas Association’s own Trojan horse severance tax, that marginally increased the tax from 2 percent to 2.25 percent, but grants other tax subsidies which the Ohio Legislative Service Commission shows would amount to an $8.5 million dollar loss for the General Revenue Fund [annually], including a $1.1 million dollar loss to the School District Property Tax Replacement Fund. If passed, Ohioans would lose out on any actual benefit from fracking, period. Kasich is being just plain out-dueled by his radical counterparts in the statehouse and their friends at the Ohio Oil and Gas Association.

Oddly, the governor might be in a ripe position to fight back. A moratorium on drilling and a full investigation of ODNR’s relationship with industry would certainly get their attention.

One thing is for certain—FrackGate has Ohio on notice, and the people are watching.

6 takeaways from the ODNR fracking memo scandal

fracking well
fracking well

A fracking well looms large above eastern Ohio’s rolling hills (courtesy of Inhabitat).

The Ohio Department of Natural Resources (ODNR) has found itself in hot water after the Ohio Sierra Club obtained a document that showed the agency planned to actively promote oil and gas drilling in Ohio’s state parks. The memo details ODNR’s plans to actively counter opposition from environmental groups, which it labels as “eco-left pressure groups” and “skilled propagandists,” by collaborating with industry allies and like-minded third parties, including the Ohio Oil and Gas Alliance, Halliburton, and the US Chamber of Congress.

I don’t feel like spending an entire post responding to the document; there are plenty of stories about it already. Plunderbund has an excellent piece on the scandal, which is well worth reading in full:

While the document displays a startling collusion between the fossil fuel industry and the agency that’s supposed to regulate it, one should expect little more from the Kasich administration and its allies in the Statehouse. The Ohio GOP has devolved into little more than a mouthpiece for the industry at this point.

Just last month, Tony Stewart, the president of the Ohio Oil & Gas Association, told the Dispatch that it “came up with the methodology” behind HB 375, the GOP bill to rewrite Ohio’s tax laws for the industry. The bill, which makes Gov. Kasich’s original proposal look downright progressive, guarantees that Ohio would continue to give away its natural resources for pennies on the dollar.

Despite the inherent risks associated with fracking, the Ohio GOP seems far more interested in colluding with the industry that protecting the health and well-being of its constituents and the environment of our state. The state has bent over backwards to import fracking wastewater from Pennsylvania – trucking in more than 100 million gallons in 2011 alone – despite the fact that injection wells have caused more than 100 earthquakes near Youngstown. ODNR also allows fracking companies to dispose their waste, which can contain the radioactive element radium, in municipal dumps; the Ohio Environmental Council has labeled this practice “dump and glow.”

I just have a few additional thoughts to share on this story:

  1. This story does not reflect well on John Kasich, who has consistently tried to position himself as a “compassionate conservative” and seems to fancy himself a Republican leader in the model of Ronald Reagan. Having your administration actually develop a list that demonizes environmental groups and Democratic State Senators as “adversaries” who are attempting to “create public panic” and must be taken down comes off as a hell of a lot more Nixonian than Reaganesque.
  2. Memo to Kasich spokesman Rob Nichols, part 1: If you are trying to distance yourself from a politically damaging story by claiming that the Governor’s office was unaware of what ODNR was up to, maybe it’s a bad idea to call the environmentalists who raised this issue “extremist groups.” It’s tough to distance yourself from a document by parroting its language and implicitly endorsing it.
  3. Memo to Rob Nichols, part 2: Oh, and you’re probably going to need to do a better job explaining why 8 members of the administration were invited to a meeting to discuss the strategy that exact same day that the document was drafted. I’m sure there’s a logical explanation.
  4. If the Ohio GOP honestly believes that moderate environmental groups like the Ohio Environmental Council and NRDC are “extremists” and “propagandists,” they really need to get their heads checked. I guess when you’re that far to the right, all center-left environmentalists look like “enviro-socialist rent seekers,” to quote Senator Bill Seitz.
  5. I have my doubts that administration is only pushing drilling in state parks “to ensure a balance between wise use and protection of our natural resources for the benefit of all,” as the memo claims. It’s hard to believe that the same elected officials who are going out of their way to keep Ohio’s oil and gas severance taxes substantially lower than any other drilling state – willingly forgoing at least $800 million in tax revenues – are pushing fracking because “it will provide millions of dollars to restore deteriorating park and forest infrastructure.” It’s all about better bathrooms, folks.
  6. Lastly, it’s laughable that ODNR lists friends of parks/forests groups and communities who live near state parks/forests as “allied audiences” who would share the same goals as the administration. As I’ve noted in the past, the people who bear the greatest burden from natural resource extraction are those communities sitting on the front lines. Yet, despite the fact that fracking has damaged at least 360,000 acres of land nationally since 2005 (including more than 1,600 in Ohio), neither Governor Kasich’s bill nor HB 375 specifically sets aside a single dollar from severance taxes on the industry for affected communities. I’m just a tad bit skeptical that a group of lawmakers who ignore perhaps the single most important tenet of good natural resource governance is going to oversee fracking in a way that will cause no “disturbance” to our common, public heritage as Ohioans.

Ohio’s oil & gas industry literally wrote HB 375

state rep. matt huffman

State Representative Matt Huffman (R-Lima) is the main sponsor of HB 375 (courtesy of Ohio House GOP).

As a follow-up to my piece on the horrors of HB 375, Ohio Republicans’ plan to alter the state’s severance tax on the oil & gas industry, I came across an article from The Columbus Dispatch on the potential impact of the bill to tax revenues in the state:

The state tax commissioner says the impact on Ohio taxpayers of a tax plan for the state’s burgeoning oil and gas industry — sold as a way to reduce Ohioans’ taxes — cannot be predicted.

“The bill has some significant components that would have unpredictable impacts on state revenues,” Tax Commissioner Joe Testa told The Dispatch. “Specifically, the net-proceeds model it’s based on gives us no way of knowing what net figure these taxpayers will be declaring.”

Testa joins the nonpartisan budget analysis arm of the legislature in declaring the financial impact of the severance tax in House Bill 375 difficult to ascertain. Money would go for drilling oversight, capping of orphan wells and a minor annual income-tax cut.

“It allows for credits to be taken against other taxes for severance tax paid,” he said. “That approach is a lot like the old corporate franchise tax that Ohio wisely did away with because there were too many loopholes.”

Buried at the bottom of the article, however, is a single clause in the last sentence of the piece that, while not surprising in the least, is definitely illuminating. Tom Stewart, the president of the Ohio Oil and Gas Association noted that

oil and gas interests came up with the methodology used in the legislation.

In other words, the industry wrote the language on what may be the most important piece of legislation regulating their profits in Ohio over the last 40 years.

We already knew that HB 375 amounted to little more than a massive giveaway to Ohio’s oil & gas industry. Now we have proof, straight from the horse’s mouth.

Ohio can’t afford the GOP’s massive giveaway to the oil & gas industry

fracking well ohio
fracking well ohio

A hydraulic fracturing well looms large over the Ohio countryside (courtesy of Ideastream).

In March 2012, the Ohio House of Representatives introduced HB 487, a bill which included changes to the way that Ohio taxes oil and gas extraction in the state. Ohio’s current system of regulating oil and gas production was implemented in 1972. Almost everything about the energy sector in the United States has changed drastically in the last 40-plus years; I wish I could say these regulations were included.

Ohio’s existing severance tax

Ernst & Young analyzed Ohio’s existing severance tax and Governor Kasich’s proposed changes (PDF) in 2012. E&Y compared Ohio’s tax policy to that of seven other oil and gas producing states. Of the eight states, Ohio has by far the lowest effective tax rate (ETR). The state’s combined ETR of 1.8% is 80% lower than the average in the seven other states. Based on a 2011 analysis from Policy Matters Ohio, this tax rate has cost the state millions in foregone tax revenues. From 2001-2010, the  value of the oil and natural gas extracted within the state was $8.38 billion. But Ohio collected a mere $26,017,858 in taxes – equal to 0.31% of the market value. That’s not at typo. Using these numbers, Policy Matters projected the amount of severance taxes that Ohio would collect from shale gas production from 2012-2015, compared to five surrounding states. Of the $10.77 billion in estimated value, Ohio will capture just $39.8 million in taxes. Compare this number to West Virginia and Michigan, whose 5% tax would bring in $538.4 million.

The Kasich proposal

Clearly, Ohio’s current severance tax sucks. Governor Kasich’s plan was supposedly introduced to rectify this issue. The proposal would have doubled severance taxes on oil from conventional, vertical wells to $0.20 per barrel and altered the tax on natural gas from vertical wells to the lessor of 1% of the market value of the gas or $0.03 per thousand cubic feet (mcf). It would have also priced oil and gas from horizontal wells, which is produced using the controversial hydraulic fracturing method, separately. This oil would have been taxed at 1.5% of the market value for one year, then at 4% for the lifetime of the well. Natural gas from fracking wells would have been taxed at 1% across the board. E&Y’s analysis found that this proposal would have increased the effective severance tax rate from just 1.8% to 2.7% overall; however, Ohio would still have the lowest tax rate in the region. Under Kasich’s proposal, Ohio’s ETR for an average oil/gas well would be just 40% lower. What a relief.

Ohio Republicans strike back, introduce HB 375

And yet, Ohio Republicans balked at Kasich’s plan. During budget deliberations, the plan was completely stripped out of the bill. Recently, Ohio Republicans finally offered up their alternative to Kasich’s proposal. State Rep. Matt Hoffman (R-Lima) introduced HB 375 on December 5. Shockingly, the bill has overwhelming support from the oil & gas industry.

Thomas Stewart, head of the Ohio Oil & Gas Association, issued a statement saying the bill “includes a sensible modification of the severance tax based on actual well economics.”I’m not sure what energy economics textbook Mr. Stewart is reading from, but suffice it to say he’s just a tad off the mark. Headwaters Economics issued a report in 2012 that included a list of 12 recommendations for crafting fiscal policies for the oil and gas sector. HB 375 goes against every single recommendation. So let’s compare the bill to just three of these recommendations.

1. Maintain a high effective tax rate

Headwaters argues that it is essential for states to keep a high ETR on their mineral deposits, because it provides additional resources to mitigate the impacts of drilling and allows them to invest in long-term economic development.

kevin bacon dancing

Even 1980s Kevin Bacon knows that the oil & gas industry isn’t footloose (courtesy of People Magazine).

Contrary to fear-mongering from industry reps and the Ohio GOP, the oil & gas industry is not going to flee the state and give up concessions just because the state increases slightly its pathetically low severance tax. As Headwaters notes, Montana had an ETR of 4.6% for oil and gas in 2011. Neighboring North Dakota, in contrast, keeps its rate at 9.9%. Despite this, North Dakota has seen significantly more drilling activity, and Montana’s poorly-designed tax policy cost the state $60 million in foregone tax receipts in 2010 alone.

The minerals sector is not directly comparable to other economic activities, like the service sector. Oil and gas producers migrate to where the oil and gas deposits are, not where taxes are lowest. The industry is not, in economics parlance, particularly footloose. If it were, then Texas and Alaska, where tax rates are 8.2% and 25%, respectively, would not be leading producers. There is simply no valid evidence to suggest that slightly higher severance tax rates will keep companies from drilling here.

Yet, HB 375 institutes tax rates even lower than Kasich’s proposal. It would lower the tax on conventional gas from $0.025 per mcf to $0.015 per mcf. It also repeals the regulatory cost recovery assessment fee passed in 2010 to offset the costs of land reclamation. And, for horizontal wells, it introduces a severance tax of 1% of the value of net proceeds from oil/gas sales for 20 months; this tax then increases to 2%.

2.Remove “holiday” incentives

Several states have production tax “holidays” during the early days of oil and gas production. The logic behind these tax holidays is based on the fact that, for conventional wells, there is a lengthy gap between the drilling phase and the production phase (when the oil/gas is actually flowing). This gap can be upwards of two years for vertical wells.

But this model does not apply to horizontal wells. The drilling phase for a horizontal well is compressed, and the production phase typically jump starts thereafter. The majority of oil/gas from horizontal wells is extracted during the the first two years, after which production drops precipitously – by more than 60% in just one year in most cases.

shale gas production cycle

This image from the EIA charts the production cycles of shale wells across five different shale plays.

By providing a five-year tax holiday, HB 375 effectively ensures that Ohio will forfeit the overwhelming majority of tax revenues from its oil and gas deposits. By the time that the tax rate increased to 2% in year six, it’s entirely likely that drillers may have simply moved onto the next well.

3. Guarantee adequate local share in revenue collections

A central tenet of good oil/gas policy is to guarantee that the benefits of the fuels are adequately shared with communities on the front lines of extraction. As I’ve written before, the US isn’t somehow immune to the impacts of the natural resource curse. Far from it. One can find evidence of the resource curse from horrifically high mortality rates (PDF) in Appalachia to skyrocketing crime rates in North Dakota to groundwater pollution from fracking in multiple states to increased damage to infrastructure in Texas.

HB 375 does nothing to support front line communities. Ohio’s past two biennial budgets have taken a toll on local governments. Ohio Republicans balanced the state budget by holding onto tax revenues that should have been returned to local governments. The 2014-2015 budget reduces the amount of money local governments will receive by $1.4 billion. HB 375 simply exacerbates the issue further. Under the proposal, the funds raised would go to the Ohio Department of Natural Resources to cover the costs regulating the industry, remediating abandoned wells, and conducting geological surveys for the industry. Any additional funds would go to reduce personal income taxes. This policy would disproportionately benefit the wealthy and leave those directly affected by drilling on the outside looking in.

HB 375: Great for the industry, terrible for Ohio

All told, Policy Matters Ohio found that HB 375 would cost the state $620-800 million over the next decade, compared to the Kasich proposal (which is far from ideal policy). The bill amounts to little more than a giant handout to the oil & gas industry. Ohio’s current oil/gas severance tax is a 40-year old relic of terrible policymaking. It would be a challenge to make a policy that’s worse.

Somehow, Ohio Republicans have crafted a bill so terrible that it gives existing law a run for its money. If you were looking to develop a policy that took the full advantage of our natural resource endowment and benefited ordinary Ohioans, you could hardly do worse than HB 375. But, on the other hand, if your goal was to benefit the wealthy, well-connected, and your political benefactors, you would be pressed to outdo HB 375.

This bill is egregiously bad policy. Naturally, I expect it will be on Kasich’s desk by the spring.