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Tuesday, February 3, 2009

SB 171: Pipeline Tax Returns!

An eager reader in Marshall County—you know, up at the head of that strip of South Dakota land Big Foreign Oil is claiming as sovereign Canadian territory—Sounds the trumpet on Senate Bill 171, the return of the pipeline tax! Just like the good bill Republicans defeated last year, SB 171 would tax oil pipelines at 2 cents per barrel pumped through the state. Collections would be capped at $30 million, and the funds would be dedicated to cleaning pipeline messes.

SB 171 still misses the big revenue boat. TransCanada has two pipelines coming: Keystone I here in East River will carry up to 590K barrels per day; the proposed Keystone XL through West River would carry up to 900K barrels. Tax that 1.4M barrels at a dime a day, and South Dakota gets $54M per year. Make that 11 cents a barrel, and we cover the projected $58.7M shortfall in this year's state budget.

As TransCanada's reaction to the drop in oil prices this fall shows, no tax South Dakota imposes will stop their pipelines or their profits. A pipeline tax doesn't come out of the pockets of a single South Dakotan, unless you want to count the very indirect and minuscule increase in gasoline prices that might crop up—to estimate, take ten cents a barrel divided by 42 gallons, divided by TransCanada's fraction of the market, and if you stretch, you might get 0.1 cents per gallon.

SB 171 is a good idea that can be made even better: amend the tax up to a dime a barrel, strike the cap, and open those funds up for any budgetary use. Welcome to the neighborhood, TransCanada: time to pay your share.

Update 08:30 CST: Don't expect Senator Russell Olson (R-8/Madison) to support SB 171. After speaking so pejoratively of Scott Parsley's work as a lobbyist for local energy groups, Olson happily accepted a $100 campaign contribution from Peter "P.J." Jaskoski, lobbyist for TransCanada.


  1. So, I can buy Russ Olson for 100 bucks I knew he was a sell out but did not know it took that small amount of money. I guess gotta pay for all those signs somehow.

  2. Your idea for a dime per barrell is exactly what we need. Maybe even more per barrell and no cap. What are other states charging as a tax on the right to cross and possibly contaminate our state with crude oil under pressure?

    Leave Russell Olson alone. I give him credit for even listing the donation since those of $100 or less don't have to be individually listed. Seems he believes in transparency of government. At least he reported his income, unlike our former Senate Minority Leader, who has now provided our state with another black eye.


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