Severance tax on gas drillers makes sense for Pa.
By Lance Haver If you have been following the political question of whether Pennsylvania should pass an extraction tax on natural-gas wells, here are five things to keep in mind:
By Lance Haver
If you have been following the political question of whether Pennsylvania should pass an extraction tax on natural-gas wells, here are five things to keep in mind:
Under Gov. Wolf's proposed budget, the severance tax would be used to help fund our schools and develop sustainable energy. Without the tax, not only will our schools suffer, but we will lose an important opportunity to move toward a sustainable future.
Taxing natural-gas wells is not a contentious issue in other states. Pennsylvania is the only state that has large reserves of natural gas and/or oil that does not have a severance tax. States led by Democratic officeholders, like California, tax natural-gas wells, but so do states led by Republicans. Texas, Louisiana, and Oklahoma, all states led by self-described conservative Republicans, tax natural-gas wells. So do Wyoming, Alaska, Alabama, Arkansas, and Utah. Other states with a similar tax are Ohio, North Dakota, West Virginia, Colorado, and New Mexico. Even Kansas, which many believe has the nation's most conservative governor in Sam Brownback, has a severance tax on natural-gas wells. Only in Pennsylvania is the extraction tax considered a partisan idea.
If you live in Southeastern Pennsylvania and use natural gas, you are already paying a severance tax. Because most of the gas used in our region comes from pipelines built long before the Marcellus Shale fields were drilled, the gas comes from other states. These states tax the gas that comes out of the wells. So unless the drilling companies are paying the taxes from their profits, the tax is paid by the people living in our region who buy the gas. We just don't benefit from it. It's as if a percentage of Pennsylvania's sales tax were collected from Pennsylvanians and sent to another state.
Taxing wells does not chase away the natural-gas industry. States that have the largest oil and natural-gas industries charge a severance tax. Those states have robust gas and oil industries.
If Pennsylvania is the only state with a large natural-gas industry that does not have a severance tax, where would the companies move to if Pennsylvania enacted one? Any other state with reserves worth drilling for would collect a tax.
Considering these facts, why is there any opposition to passing a tax on natural-gas wells? Every other state with such an industry has a similar tax. The drillers are extremely profitable. Our schools desperately need the money. And developing renewable energy is something the overwhelming majority of us want.
The answer, sadly, is what makes so many people cynical about government. It is because of the amount of money it costs to run a modern campaign and the ability of the natural-gas industry to make significant campaign contributions.
Furthermore, research by Common Cause Pennsylvania and Conservation Voters of Pennsylvania finds that from 2007 to 2014, the natural-gas industry spent $41 million lobbying members of the Pennsylvania legislature.
Of course, money isn't everything. Not every candidate with the most money wins, and not every profitable industry gets what it wants. History has shown that people's voices are often more important than corporations' contributions. And that may be true when it comes to passing the same type of tax every other gas-producing state has - a severance tax. But it will only be true if people know the facts and ensure that they are heard.
