SPRINGFIELD — Looking for revenue and short on sources, some Illinois lawmakers want to tax oil and gas drilling.

By Anthony Brino

SPRINGFIELD — Looking for revenue and short on sources, some Illinois lawmakers want to tax oil and gas drilling.

House Bill 4312 would levy a 12 percent tax on the value of oil and natural gas drilled in Illinois. Starting in January 2013, companies drilling in the state would pay based on volume, with the money generated going to the state’s General Fund.

State Rep. Naomi Jakobsson, D-Urbana, and House Speaker Michael Madigan, D-Chicago, are the bill’s sponsors.

“In these difficult economic times, it’s one way to increase revenue,” said Jakobsson.

Jakobsson said there are no estimates on how much the tax would raise, and the 12 percent figure is arbitrary.

The proposal, which is still in the House Rules Committee, comes amid burgeoning interest in Illinois’ New Albany Shale, with dozens of companies securing the rights to drill across thousands of acres in southern Illinois.

Geologists and engineers know the roughly 4,500-foot-deep New Albany Shale — thought to be the source of all the shallow oil once extracted in southern Illinois — contains oil. But experts are split on how much can be extracted and whether it’s worth the time and money to experiment.

A 12 percent severance tax probably would discourage companies from trying to find out, said Kim Oelze, president of the Illinois Oil and Gas Association, a trade group representing mostly small and medium-sized drilling companies.

“We think it’s an unfair tax,” Oezle said. “We’d like to give companies time to come in and see if their technology will work.”

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  1. Another tax from Democrats

    Whaddya know, another tax sponsored by Democrats.

    King Mike Madigan has decreed another tax over his dominion known as Madiganistan.

    Overtaxed peasants will have a chance to revolt at the voting booth this November.

  2. Oil Drilling Tax?

     Democrat state policy is to find new ways to tax, fine, and bill everyone in order to keep rheir private army in jobs and benefits. The AFSCME union, if taken care of, will fight for the right to keep enriching the politisians who butter their bread. Without this quid pro quo relationship, the Democrats would be out of power and Illinois can start healing. I'm not saying that the Republicans are angels. But in the area of corruption, the Reps are no match to the Dems.

  3. What the frack?

    Does this mean that fracking technology will be used near the New Madrid fault?

    The one that rang bells in churches on the east coast?

    The one that changed the course of the mississippi?

    1. New Madrid Seismic Zone

      It is unlikely that hydraulic fracturing (fracing not fracking) would encounter the New Madrid Seismic Zone. The New Albany and Maquoketa Shales that are considered are shallower than the New Madrid Seismic Zone and principally located in Edwards, Wayne and Hamilton Counties. The main New Madrid Seismic Zone is located within the Reelfoot Rift in Northeastern AR, Southeastern MO, and Northwestern TN. The very Northern extremity touches deep Southern IL. I point you to Geology of Illinois edited by Kolata and Nimz;  Page 87, Figure 3-11 along with other discussions in this book. You can obtain this book through The Illinois Geologic Survey Champaign, IL

  4. Airhead legislator

    Gotta love the knowledge of the co sponsor of the bill, from Urbana… She has no

    Idea of how much the tax will generate, and the 12 percent figure is arbitrary…genius….

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