Gov. John Kasich's bid for an increase in the severance tax -- also known as the fracking tax -- on gas and oil production appears to be dead in the water, at least as long as the downturn in energy industry persists.
Kasich has been seeking a boost in the severance tax since 2013, when he called for the tax rate to rise to 4 percent. His most recent proposal called for a 6.5 percent tax.
In pitching the tax hike, Kasich maintained that the existing tax is extremely low compared with neighboring states and noted that the firms profiting from oil and gas exploration are extracting finite natural resources. Taxing them to enable a portion of their revenues to remain in Ohio would be a matter of equity, he said.
When Kasich first asked for the tax hike, Ohio appeared to have a bright future as an oil and gas producer -- despite the justifiable concerns raised by opponents of fracking -- and having the state share in the profits from the boom seemed like a logical revenue source.
The boom in oil and gas seems to have gone bust, however, with a downturn in energy prices that the Ohio and Gas Association says is the worst experienced by producers in 30 years.
Legislators showed little enthusiasm for Kasich's bid for a tax hike when it first was proposed. Given market conditions, there's even less will to impose a tax on an industry dealing with market setbacks. Until market conditions improve, according to House Speaker Cliff Rosenberger, the tax increase "is something we should stay away from."
Under Kasich's proposal, a 6.5 percent hike in the severance tax would raise the state's tax on a 50-gallon barrel of oil from 20 cents to $3.25. The tax on natural gas would rise proportionally. Small wonder the industry is raising a red flag.
The market for energy exploration that prevailed in 2013 doesn't exist now, and when -- or if -- it will return to those levels is questionable. Hiking taxes on an industry that is experiencing a downturn doesn't seem right.