Taxing Flaring and the Politics of State Methane Policy

September 2019
Barry Rabe, Claire Kaliban, Isabel Engelhart

This brief explores whether states with regulatory authority over oil and gas production include methane within their own established severance tax regimes. It acknowledges minimal published scholarship on this issue, aside from general discussion by a number of economists on whether or not accurate methane measurement for taxation is technically feasible. It draws upon a review of a half-century of state tax code and legislative changes, while placing particular emphasis on developments during the shale era. In short, methane is a constituent element in natural gas but is it included under or exempted from state natural gas severance taxes?