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Severance Taxes: A STORY OF VOLATILITY IN REVENUE AND PRICES
Oil and natural gas production taxes are taxes on the removal of natural resources from Texas land. The oil production tax is levied at 4.6 percent of value, and the natural gas production tax is levied at 7.5 percent of value. These taxes are the product of two factors: price and production. The price of these resources during the last nine years is a study in volatility.
During the last nine fiscal years, the average New York Mercantile Exchange (NYMEX) market monthly prices of oil ranged from $16.70 to $114.34. Prices even were negative $37.63 on April 20, 2020, in response to the COVID-19 pandemic.
The average monthly natural gas NYMEX prices ranged from $1.70 to $8.16. FY 2022 saw the second highest price on record ($9.32 on June 6, 2022), which was mainly attributable to domestic demand increase and the rise of liquified natural gas exports to the European Union to mitigate its supply crises.
Oil and Natural Gas Production Taxes, Annual Collections and NYMEX Oil and Natural Gas Prices, FY 2014-2025
OIL
NATURAL GAS
* Tax collections and price are estimated in the 2024-25 BRE
Sources: Texas Comptroller of Public Accounts; U.S. Energy Information Agency (EIA).
| Fiscal Year | Tax Collections Oil (in billions) | Oil Price (NYMEX) | Tax Collections Natural Gas (in billions) | Natural Gas Price (NYMEX) | Total Severance Taxes |
|---|---|---|---|---|---|
| 2014 | $3.87 | $101.05 | $1.90 | $4.18 | $5.77 |
| 2015 | $2.88 | $65.93 | $1.28 | $3.34 | $4.16 |
| 2016 | $1.70 | $41.40 | $0.58 | $2.30 | $2.28 |
| 2017 | $2.11 | $48.77 | $0.98 | $3.04 | $3.09 |
| 2018 | $3.39 | $60.58 | $1.43 | $2.89 | $4.82 |
| 2019 | $3.89 | $59.62 | $1.69 | $2.99 | $5.57 |
| 2020 | $3.23 | $45.46 | $0.93 | $2.09 | $4.15 |
| 2021 | $3.45 | $54.49 | $1.57 | $2.65 | $5.02 |
| 2022 | $6.36 | $89.90 | $4.47 | $5.30 | $10.83 |
| 2023* | $5.48 | $75.00 | $4.50 | $5.65 | $9.98 |
| 2024* | $6.14 | $83.00 | $4.45 | $4.85 | $10.60 |
| 2025* | $7.12 | $94.00 | $4.13 | $4.20 | $11.25 |