Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Severance Tax on Gas Drilling Is Only Fair

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Severance Tax on Gas Drilling Is Only Fair

Article excerpt

America's Largest Full-Time State Legislature is famously tardy.

We're now a solid two months past the deadline for a balanced state budget and Pennsylvania is also the last big gas-producing state without a severance tax.

That's just a coincidence. Even if we had a reasonable tax, it couldn't balance the budget all by itself. But we should do it anyway because the rest of us are about to be asked to make serious sacrifices, and the drilling industry needs to do its share, too.

Anyone who doubts that this is the right course should read a recent blog post by a senior research associate for Resources for the Future. That's a nonprofit think tank that's been around 65 years and doesn't advocate for any governmental policy or candidate. But after Daniel Raimi of RFI looked at the severance tax approved in July by the Pennsylvania Senate (and as yet unapproved by the House), he wrote this:

"Given the productivity of the Marcellus shale, it is hard to imagine drillers abandoning such a prolific resource en masse, particularly since many have sunk billions of dollars into acquiring leases, building office parks and training workers."

Pennsylvania has become the nation's second-largest producer of natural gas in the past decade, trailing only Texas, despite lower regional gas prices and a limited local labor pool, Mr. Raimi noted.

"If the existing [local] impact fee ... did not stop Pennsylvania's surging production, is it likely that additional 0.7 percent will bring growth to a halt?" he asked.

Not on your autographed picture of T. Boone Pickens.

That's the good news. The bad news is this tiny uptick in the tax - from 2.3 percent of production value to about 3 percent - would net only around $90 million, which would add just one-quarter of 1 percent to the state's tax revenue, at least using 2015 figures, Mr. Raimi wrote.

The state's situation isn't any better two years later. This week, Democratic Gov. Tom Wolf urged House Republicans to get moving on a balanced budget or there would be spending cuts. These wouldn't be the mythical painless cuts of legend, either. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.