Guest Column: Every day’s a holiday for the oil industry in Colorado

Every day’s a holiday for the oil industry in Colorado by Phillip Doe

News surfaced last week that the oil industry has been dodging its Colorado taxes, and not just now and then, but systematically. The tax, called a severance tax, is based on a small percentage of the gross proceeds from oil and gas sales each year. A recent state audit, the source of these revelations, shows that in the years 2015 through 2018 roughly 85% of the 420 active operators in the state failed to turn in the required monthly production reports. In all, over 55,000 reports are said to be missing.

Jeff Robbins, the self-anointed “czar” of all things oil and gas in the state, and also the less regally endowed director of the COGCC, expressed surprise the production reports were necessary for tax calculations. This is indeed surprising, since the COCGG’s budget is derived from severance tax revenues. In recent years the COGCC has had to go to the legislature for funding since the severance tax was inadequate to fund its budget of roughly $14 million.

Enquiring minds, even those of a czar-like nature, might wonder why an industry that assures us it contributes billions to the state’s economy each year didn’t pay enough in taxes to fund a small agency that primarily keeps the industry’s oil rigs clanging and the oil and gas pipelines flowing to points of use outside the state. Little of it is used here. Colorado is very much an oil colony.

Czar Robbins went on to say that he didn’t think that the lost tax revenues could be recovered because of a one-year statute of limitations. Perhaps that is why he showed no interest in how many years this bigtime swindling had been going on. The present severance law has been in effect since 1978.

He went on to say that the $308 million the state auditor said could have been collected in non-reporting fines was unthinkable because that isn’t the relationship the state has with the industry. Has a greater understatement ever been spoken, no matter how unintentional and lacking in 6 I irony? As ex-governor Hickenlooper liked to say, the relationship between the state and the industry was more a business partnership based on mutual respect. It was not that of a regulator. That philosophy lives on.

Neither did Robbins express much interest in recapturing what was unpaid last year. On this, like so many other things, Czar Robbins is perhaps a little confused. Defrauding the government is considered serious business in most jurisdictions, and the clock doesn’t start running until the crime is exposed. That was last week. We could wait for Attorney General Phil Weiser to intercede, for he promised to be a lion in defense of the people. But his report card is marked with absence after absence. It may be that the people will have to sue both the state and the industry.

The audit report also showed that the effective tax rate for the severance tax in Colorado is .54%. But this is old news. A state audit several years ago showed the state’s severance tax rate was the lowest of all Western states. It was 18 times lower than North Dakota’s, which has an effective rate of 9%. Had the state had an effective 9% rate last year, the tax would have been well over half a billion dollars. The actual average tax has wavered around $60 million in the last few years, though in at least one of those years most of the tax was returned to the industry because of a state Supreme Court decision awarding them more subsidies.

The grassroots group I belong to, Be the Change, drafted legislation in 2018 in response to the earlier audit report on the severance tax rate.

It recommended an effective 9% tax rate. The primary motivation was concern over the closing and maintenance costs of the roughly 100,000 wells in the state, only 40,000 of which are producing. The present bonding is totally inadequate, $100,000 for all wells in an ownership. Noble Energy owns about 7,000 wells and Anadarko about 6,500. The state

DANISH PLAN from Page 5

I BOULDER COUNTY’S INDEPENDENT VOICE “What about Biden and Warren?” “Zombies,” he said. “Dead man and dead woman walking. But with different causes of death.

“The only thing Biden brought to the table was his supposed electability, because he had been Obama’s vice president and had been in Congress since the rocks cooled before that. But once he started campaigning it turned out he was an empty suit and kinda dumb. And it didn’t help that the Trump impeachment got him a lot of earned media he could have done without. Finishing fourth in Iowa and fifth in New Hampshire put a spike in the electability argument. After Super Tuesday he’ll be gone, if not before.”

“As for Warren, she was campaigning as the thinking voter’s alternative to Bernie Sanders, with well-thought-out solutions to everything. It gave her traction until she couldn’t come up with a plausible way to pay for her wellthought-out health care plan...

“But Bernie hasn’t come up with plausible ways of paying for all the stuff he wants to do either, and no one seems to care,” I interjected. “Isn’t this a double standard at work?”

“It is, but not the one you think,” the Trickster said. “Bernie is a socialist, so no one expects him to be financially credible. But Warren was running as the adult in the room, so she was asked the adult question: ‘How are you going to pay for all the cool things you want to do?’ If she had a believable answer, she’d probably be the front-runner today.

“It doesn’t matter what office you’re running for,” he continued. “You should always say some sensible things about money without having to be asked. It won’t guarantee that you’ll win, but it will improve your chances of being taken seriously.”

“What about Mayor Pete and Senator Amy?” I asked.

“They’re the ones who ate Biden’s and Warren’s lunch in New Hampshire, and maybe even some of Bernie’s,” he said. “But they didn’t win.

“It’s anyone’s guess how they’ll do in Super Tuesday in states that have significant black and Hispanic voting cohorts with which they don’t seem to have gotten much traction. But neither has Bernie. “Southern Democrats of all stripes tend to be more conservative than northern ones, which theoretically would favor the non-Marxist candidates, but southern Dems have also had strong populist inclinations — and Bernie is running a populist campaign. So go figure.”

“And what are the chances that Bloomberg could swoop in and blow them all away with a shitstorm of money?” I asked.

“Like I told you last time,” the Trickster said, “Bernie has gotten six million contributions from more than a million-and-a-half contributors. Bloomberg has gotten all his campaign money from one contributor — himself. “Successful candidates listen to what their contributors have to say. Bernie is listening to contributors spread all over the country. He’s hearing what resonates and what doesn’t from a million-and-ahalf supporters with skin in the game. Bloomberg is listening to himself in the echo chamber of his skull. Who do you think is going to be more in touch with the voters?”

He got up abruptly. “Gotta run,” he said. “All Hell is about to break loose in South Carolina, and we’re providing color commentary.”

And in a flash they were gone. This opinion column does not necessarily reflect the views of Boulder Weekly.