Legislative Messages of Hon. James V. Allred, Governor of Texas 1935-1939 Page: 45 of 263
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most important of the natural resources of this State is natural
gas. Located in the Texas Panhandle field alone is the largest single
natural gas deposit in the world. For more than 125 miles gas deposits,
ranging from 15 to 35 miles in width, stand ready for development. At
the present time this gas is largely blown into the air. While it is not
possible to know the exact gas production in Texas, it has been estimated
that last year there were produced more than seven hundred billion cubic
feet. Of this, more than three hundred billion cubic feet were blown into
th air and forever lost to the use of man.
The total tax paid the State on this tremendous production was the
miserable sum of $228,956.00, which included the gasoline tax paid on
casinghead gasoline made by stripping the natural gas. The present tax
is two per cent of the average market value of gas produced and sold
within this State.
I recommend a flat tax on natural gas of one cent per thousand cubic
feet. This should be a severance tax levied and collected from the lessee or
purchaser of natural gas.
At present there are many outstanding contracts in the Texas Panhandle
secured by major gas producing companies when the Panhandle
field was undeveloped and when, therefore, the contract price was extremely
low. The average value, therefore, is merely nominal in most instances;
and two per cent of that average value, as the preceding figures
reflect, produces comparatively no revenue at all to the State.
Perhaps the most lamentable feature, aside from the waste of our
natural resources discussed in a recent message to the Legislature, is the
fact that a large part of remaining gas is transported by pipe lines to
other states and distant cities-tax free so far as Texas is concerned. We
should not permit these great natural resources to be drained from under
Texas soil and sold outside its borders without receiving some compensation,
representing at least a minute part of the value of the product.
Statistics are not available to reflect the amount of the gas used in
Texas. Suffice to say, the great majority of Texas gas is used outside
our borders, and, therefore, a severance tax assessed against the lessees
will largely reflect a payment into the State treasury by those using natural
gas in other states.
Under present production we would realize about $7,500,000.00 annually
from a tax of one cent per thousand cubic feet. If such a levy is made,
and this waste is prevented, production will likely fall; but, in my judgment,
a one cent tax would still produce in excess of $4,000,000.00 annually.
Of this amount, less than one-sixth will be paid by the citizens of Texas,
and approximately five-sixths by those residing outside the State.
And Other Natural Resources Taxes
In this connection I also recommend an increased tax on all other natural
resources of the State, with particular emphasis on the sulphur trust.
Texas produces such an overwhelming part of the world's supply of sulphur
that two companies have a virtual monopoly in its production. We may
ultimately expect these sulphur domes to become exhausted, and it is
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Allred, James V. Legislative Messages of Hon. James V. Allred, Governor of Texas 1935-1939, book, 1939; (texashistory.unt.edu/ark:/67531/metapth3899/m1/45/: accessed February 20, 2018), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; .