Marcellus Shale

STATEMENT: On Shale Tax and Cancelled House Session

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Marc Stier, Director of the Pennsylvania Budget and Policy Center, released the following statement on the decision by the House to cancel session days on October 23, 24, and 25:

"We at the Pennsylvania Budget and Policy Center generally don't comment on when the House chooses to be in session. But the decision by Speaker Mike Turzai and Majority Leader Dave Reed to cancel voting sessions next week—on October 23, 24, and 25—and to do so the day after the House Finance Committee approved a shale tax bill on a bi-partisan basis reeks of both chicanery and desperation.

Natural Gas Producers in PA Don't Pay Their Fair Share

In recent months -- and weeks -- Pennsylvania’s legislature has shown renewed interest in enacting a severance tax on natural gas extraction as part of the state’s overdue revenue package to fund the state budget. In response, the natural gas industry has maintained a steady drumbeat of communications claiming that Pennsylvania already has a tax on gas extraction because of its per well impact fee which does not rise with the volume or value of gas drilled.

Drillers Are Right – PA Needs Tax Rate on Gas Like Other States: It’s Time for a Severance Tax

In its recent letter to Speaker Mike Turzai, the Marcellus Shale Coalition points (in paragraph three) to the effective tax rate (ETR) on production as a key indicator of whether Pennsylvania should enact a severance tax in addition to the per-well impact fee we already have.

OK, let’s look at that ETR using Independent Fiscal Office (IFO) estimates of the ETR for 2011-16 and IFO estimates of prices and production to project the ETR (using IFO’s method) in 2017 and 2018.*

Public Investment and Economic Growth: Even the Commonwealth Foundation Gets It (Sometimes)

A strange post a few days ago by Elizabeth Stelle of The Commonwealth Foundation seeks to undermine the case for a severance tax on natural gas drilling, but inadvertently explains exactly why we need new recurring revenues in the state.

Stelle first repeats once again — without evidence — the same tired argument that natural gas drillers “pay more in taxes and regulatory costs than producers in competing states.” Not once has anyone at the Commonwealth Foundation quantified those regulatory costs or attempted to respond to a series of papers put out by PBPC, including this most recent one, that show that natural gas drillers are not paying much, if anything, in corporate income taxes to Pennsylvania and are paying far less in taxes (and fees) here than in other states.

A Severance Tax: The Basics

Pennsylvania has been considering a severance tax on natural gas for years. Here are four reasons it is long overdue: 

TALKING POINT #1: A severance tax can bring in substantial and, as natural gas prices rise, growing revenues to help close our budget and investment deficits now and in the future.

Governor Wolf’s proposal is projected to bring in $349 million next year, $712 million in 2018-2019 and $1.15 billion a year by 2021-22. (These are net revenues after deducting a credit for the impact fee already paid by natural gas drillers.) Even a tax at slightly lower levels brings in over $200 million next year and close to a billion dollars a year 2021-2022.

Congratulations to Board Member Jordan Yeager on Act 13 Decision

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In a win for environmentalists and municipalities, the Pennsylvania Supreme Court last month struck down a number of provisions to the state’s oil and gas law, Act 13. Keystone Research Center board member Jordan Yeager was the attorney who argued for the towns and environmental groups involved in the challenging the law.

Boom and Bust: Lessons From the Gas Patch

In 2011, the town of Towanda in Bradford County was at the epicenter of the shale drilling boom. A visitor would have been hard-pressed to find a vacant hotel room. There were waiting lines at the restaurants. The streets and roads were choked with big-rig diesels hauling the water, rigs, equipment, gravel, sand and chemicals needed to develop the gas wells. Rents doubled or tripled forcing some low-income families into homelessness.

More on Counting Shale Jobs and Deciphering Who Cooks the Books

As the saying goes, “It’s better to keep your mouth shut and appear stupid than open it and remove all doubt.”

Natural gas severance tax or impact fee – false choice

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Pennsylvania should enact a severance tax on natural gas production. The need to enact a severance tax will not change regardless of the outcome of current, protracted budget debate between the Republican-controlled General Assembly and the Wolf administration.

October Payrolls Up Overall but Down in Mining, Logging and Schools

This morning the Bureau of Labor Statistics reported that the unemployment rate in Pennsylvania was down slightly to 5.1 percent, and nonfarm payrolls were up by 13,700 jobs last month, each from their respective September levels.

After two months of declines in nonfarm payrolls, the return to growth in October was  a welcome change.

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