Commentary: Louisiana needs to cash in on high oil prices

New Orleans CityBusiness, Jun 16, 2008 by Mark Singletary

Do you trust our Legislature?

What I'm about to propose requires we put complete faith in the Louisiana Legislature. This exercise can only work if the men and women meeting in Baton Rouge swear the proper oaths and promise to stick needles in their eyes if they go back on their word.

It's time we started taking advantage of our natural resources.

Oil and gas prices are pretty high. Last week oil was trading somewhere north of $135 per barrel and natural gas was trading at well over $10 per million BTU. There are no indicators that predict these commodity prices will ease in the near future.

In an Associated Press news brief published on www.neworleanscitybusiness.com last week, Guy Caruso, head of the U.S. Energy Information Administration, predicts $100 oil for the foreseeable future. His projections suggest a barrel of oil will cost $107 in 2015.

Caruso also said motorists should get used to paying $4 for a gallon of gasoline.

Rosy outlook, right? It's about time somebody did something. Our Legislature should look at a program that would allow every dollar more than $100 for oil and $8 for natural gas to offset retail taxes collected at state gasoline and diesel pumps.

This is where it gets tricky because I want this plan to benefit the Louisiana residents, not just drivers passing through. I am not advocating a suspension of the gasoline and diesel taxes collected through retail sales. I suggest we calculate rebates to offset the portion of the taxes reserved for road and bridge repairs.

The offset for the rebates must come from a well defined, easily audited, untouchable allocation of revenues generated from inland oil and gas production -- from federal leases.

Our roads and bridges are a mess. The Legislature and the governor, with plans developed by the Department of Transportation and Development, have outlined a strategy that should begin to yield better Louisiana highways.

Nothing I'm writing about should change, slow down or alter those plans. Actually, I'd like to see a more aggressive program for roadway improvements.

But we can fund these repairs from the energy sector largesse.

As long as oil and gas prices stay high -- more than $100 and $8 respectively -- the Louisiana budget is going to be gaudy. We've watched as the Legislature convened in special sessions the past couple of years to spend the extra (unexpected) billion or so generated from the oil and gas royalties.

That money shouldn't be spent just because it's there.

The state of Alaska has, for years, refunded excess revenues to taxpayers. When oil and gas royalties generate millions and billions of "extra" revenues for Alaska, its Legislature simply divvies up the surplus and sends it out to happy Alaskans. That's a nice plan, but not what we need right now.

What we need right now are better roads ... and money in our pockets.

So let's leave the state gasoline taxes in place. Let's encourage drivers from Mississippi, Texas and wherever to take a trip through our state and fill up their cars and trucks at Louisiana gas pumps.

Let's collect those taxes and compare those state revenues against the oil and gas royalties generated from premium prices, again more than $100 for oil and more than $8 for natural gas. Then let us get those rebate checks in the mail. The excess revenues should generate an energy rebate of about $1,000 per Louisiana household.

Wouldn't it be nice to actually benefit from high oil and gas prices?

Wouldn't it be nice for the rest of the nation to have oil and gas envy for Louisiana?

Wouldn't it be nice to call our friends and relatives and crow about the rebate checks we get in the mail?

And, most importantly, wouldn't it be a fitting legacy for this populist state to really benefit from the oil and gas drilling that has been around for years without giving us taxpayers any tangible benefit.

This is a plan supported by the rest of the country that really benefits Louisiana families and it's about time.