Severance tax on natural gas will happen, Ridge says

PITTSBURGH - Former Gov. Tom Ridge believes Pennsylvania will adopt a natural gas severance tax.

"I think there will wind up being a severance tax in this state," Ridge told a gas-industry conference Thursday. "Just my feeling."

Ridge's comments came a few minutes before Gov. Corbett, a fellow Republican whose reelection effort has been lagging in the polls, took the stage at the Shale Insight conference at the David L. Lawrence Convention Center. Corbett has staunchly opposed a severance tax, saying it might retard the industry's growth, despite polls showing strong popular support for a levy on gas production.

Corbett restated his opposition Thursday.

The severance tax, advocated by Corbett's opponent, Democrat Tom Wolf, was a looming issue at the annual two-day conference sponsored by the Marcellus Shale Coalition, which lobbied against a severance tax. Corbett instead signed an impact fee into law, which has raised more than $600 million in three years, less than most severance taxes that have been discussed.

Ridge did not say who he thought would win the election, but said that "at the end of the day," a tax would be considered after the November election.

Ridge, who spoke to the conference about cybersecurity, addressed the severance-tax issue in response to a reporter's question. Ridge did not advocate a tax, but said political pressure to enact one would be undiminished as long as Pennsylvania remained the only major gas-producing state without one.

"I'll let the politicians decide, but it's always going to be out there, particularly because other states have it. Some of them are higher than others," said Ridge. "So you just ought to caveat beware, caveat emptor."

Ridge acknowledged the concerns of gas-industry promoters, who fear that a severance tax would make Pennsylvania's marginal gas-producing areas uncompetitive, and that some oil and gas rigs would move to more profitable regions in other states.

"The question becomes, they'd better be doggone careful that the burden imposed on all you in this room doesn't exceed the tax and regulatory burden you've got elsewhere, because you'll just pick up the equipment and go elsewhere," said Ridge.

"So it's a political sensitivity and an economic sensitivity, and where that balance is, I don't know."

Corbett, in an onstage conversation with David J. Spigelmyer, the shale coalition's president, said that in the future - "10, 15 years down the road" - the industry and anticipated spin-offs would be sufficiently established to accommodate a severance tax.

Corbett lamented that some voters and his political opponents did not share his belief that the energy industry has the option to easily shift capital, equipment, and workers to different states, depending upon the best opportunities.

"Unfortunately, there are many people who won't take the time to learn the competitive nature of this industry," Corbett said.

"I often hear them say, 'The gas is here, it's not going to go anywhere, so they're not going to go anywhere.' I disagree. And I think the industry needs to be much more vocal about that.

"They need to educate - and I'm looking at the next six weeks - they need to educate the voter. They need to educate my opponent."

Corbett's sentiments were well-received by the audience, whose Republican leanings were evident. The conference's speakers included conservative television personality Sean Hannity and Dana Perino, former White House spokeswoman for President George W. Bush. Bill Richardson, the former Clinton administration energy secretary and New Mexico governor, addressed the conference Thursday and joked that he and the waitstaff might be the only Democrats in attendance.