November 25, 2013

Michigan bill could incentivize oil and gas exploration and production

A bill currently before the Michigan legislature would exempt equipment used to develop oil and gas wells from personal property taxes, according to The Traverse City Record-Eagle.

A bill currently before the Michigan legislature would exempt equipment used to develop oil and gas wells from personal property taxes, according to The Traverse City Record-Eagle. The bill's cosponsor, Sen. Patrick Colbeck of Canton Township, says the personal property tax kills jobs in the field of oil and gas exploration, which he describes as “pretty critical” to the state's economy. The bill would be retroactive to 2012, and would also exempt drilling costs.

According to the Michigan Oil and Gas Association, the bill would fix an administrative error by state officials that had left oil and gas companies open to higher rates of taxes on their exploration, development and drilling activities. The hope of legislators introducing this bill is to mitigate costs for energy exploration and incentivize this activity in the state.

America's energy renaissance, fueled largely by hydraulic fracturing technologies, has been a boon to many state economies. Michigan hopes to join in on the benefits of this trend, and this bill is a move in that direction. While some worry that the bill would take revenue from some of the state's poorest local governments, others are confident in the power of the oil and gas industry to revitalize flagging economies.