Higher gasoline prices at the pump are frustrating consumers nationwide, but for Kansas and other oil-producing states, higher oil prices could have a bright side.

That’s because Kansas has oil. The state is the eighth-largest oil producing state in the country, and with oil prices nearly quadrupling during the past five years, the industry is picking up.

In April alone, 420 drilling permits were issued by the Kansas Corporation Commission. That was the most permits issued in one month since 1990, said the KCC’s Dave Williams.

The increase in activity is expected to boost state revenues with increased severance, income and property taxes.

Kansas charges a 4.33 percent severance tax on oil and gas removed from the earth. State economists estimated an extra $800,000 in oil-related taxes for fiscal year 2004 when they met in April. Those estimates are likely to go higher for the 2005 budget if prices stay high.

New jobs, though, may be the biggest benefit.

“Two to three years ago, drilling contractors were going around begging people to drill,” said Ed Cross, executive vice president of the Kansas Independent Oil and Gas Assn. “Now they’re swamped. There’s a six-to-eight-month waiting period.”

Industry observers are predicting that the long waits to drill wells will lead to an increase in hiring by oil service companies across the state.

“If prices remain high and there is more activity, more people will need to be hired to work in the oil patch,” Williams said. “For Kansas, that’s good news.”

But Chris Courtright, principal economist for the Kansas Legislature, warned the state still may have more to lose than gain from higher oil prices. That’s simply because Kansas residents are paying a higher price for gasoline at the pump. The extra expense means they’ll have less money to spend on other items. And if consumers begin to tighten their spending, the state could lose more in sales tax revenues than it gains in new oil taxes.

Dan Hutchinson, Rantoul, a production supervisor for Martin Oil of Oklahoma City, checks a storage tank at an oil well south of Wellsville. Hutchinson said Wednesday that the storage tanks hold 100 barrels of oil and were checked every day. Hutchinson checks wells in Johnson, Franklin, Anderson and Miami counties.

Still, the rising prices could be good news for the Kansas agriculture sector. That’s because many of the state’s oil wells are on agricultural ground. Owners of that property receive royalties from the production companies that pump the oil. The increase in royalty payments also will help the state because income tax is charged on the payments.

“This is a tremendous source of income for a lot of people who farm on mineral-rich property,” said Tim Carr, chief of the Kansas Geological Survey at Kansas University.

He said he expected the state’s oil industry to remain busy as long as prices remain high.

The state experienced a decline in oil production in 1999 when oil prices dropped to near $10 per barrel. Prices now are hovering above $35 per barrel.

The July contract for light sweet crude rose 26 cents Wednesday on the New York Mercantile Exchange, to close at $37.54 a barrel. The market has been mainly lower the past week after hitting a record last week of more than $42.