TYLER (KYTX) - President Obama calls for an end to tax breaks for the oil and gas industry. The state of Texas is thinking about it too, putting thousands of East Texas jobs on the line. CBS 19's Michele Reese explains how the City of Tyler and the gas industry are hoping to encourage legislators to keep the incentives in place.
America's real hope to ending dependence on foreign oil could be natural gas, and that's right here in East Texas.
The exploration was fueled by a tax incentive called 'The High Cost Gas Investment Tax Credit'. It's a credit that's now in jeopardy.
Drilling for natural gas is highly technical and financially risky, and that risk has led to exploration. So much in fact, the U.S. now has 150-year supply of natural gas. Much of it drilled in East Texas' Haynesville shale.
Bob Garrett with Fair Oil said the high cost tax incentive made it possible and he's fighting to keep it. "It has taken a tremendous investment to get here and we need to improve it to reduce the cost so there should be incentives that remain in place that will allow us to move forward as we produce this domestic gas supply."
A report by the Legislative Budget Board to lawmakers said since 2004, tax breaks on natural gas wells amounted to $7.4 billion. So in a tight budget year, legislators are looking to repeal the incentive.
But Garrett argued his industry pumps billions into the Texas 'economy. "About $63 billion a year in economic output into our state, and earnings of about $32 billion."
And a lot of that money stays in East Texas.
"We don't want to take away anything that is an incentive for oil and gas to continue to grow," explained Tyler City Council member Mark Whatley.
The City of Tyler is encouraging legislators to keep the incentive by passing a resolution.
"We as a city want to continue to make every effort we can in order to encourage those companies to grown here and bring more jobs here," Whatley added.
He said the industry accounts for 40,000 new jobs. "For every $1 that is invested there is a $4 return."
Jobs that come even during a rocky economy.
If tax breaks on natural gas wells are eliminated, the city warns that the companies could moved to other states like Louisiana that have shale production.
Tyler City Council voted on adopting the resolution during their city council meeting this week. There are eight other cities in Texas who signed a similar resolution.
