On Monday, Gov. Tom Wolf again proposed a severance tax on the natural gas industry — a move that has met opposition again from the local energy industry.
Senate Bill 1000 and House Bill 2253 propose a tax ranging from 4 to 7 cents per thousand cubic feet of gas. The amount of the tax would depend upon the price of gas.
At a press conference Monday, Wolf said it is a “reasonable severance tax in line with other gas-producing states where energy pays its fair share.”
However, industry officials and many state Republicans don’t share his opinion.
Pennsylvania Independent Oil & Gas Association President and Executive Director Daniel J. Weaver said, “Governor Wolf's proposed severance tax was a bad idea in 2014 and it has continued to be a bad idea for each of the last four years. Nothing has changed in Pennsylvania's tax structure to allow the Commonwealth to become competitive with other energy-producing states with tax policies that actually encourage the production of oil and gas, rather than punish it, as this tax would do.”
Unconventional drilling on the Marcellus Shale has had a big economic impact on the region, said Mike Butler, Consumer Energy Alliance’s Mid-Atlantic executive director, calling the gas production a “tremendous blessing to Pennsylvania.”
It has “not only generated an impressive increase in jobs and economic growth, but it has also substantially reduced household energy costs, revitalized and provided opportunities for our skilled trades and cemented Pennsylvania’s role as a national energy leader.”
He said the University of Pennsylvania Kleinman Center for Energy Policy reported a 40 percent drop in residential gas prices since 2007. That should be celebrated, Butler said.
“Instead of limiting production and increasing energy taxes, we need to continue to harvest this vast natural resource and reap the benefits it provides,” he said.
The state’s Republican Party Chairman Val DiGiorgio had harsh words for Wolf and the proposal.
“In another futile attempt to quench his insatiable appetite for cradle-to-grave tax increases, Gov. Tom Wolf has once again chosen his ideology over pragmatism in calling for this economy-stifling natural gas severance tax,” DiGiorgio said.
State Rep. Marty Causer, R-Turtlepoint, said this was more of the same from the Democratic governor.
“He continues to push for a punitive tax on the energy industry to support his excessive spending habits. The natural gas industry is already paying business taxes and impact fees, which are primarily being invested in the communities where drilling takes place,” Causer said.
The severance tax would go to the state government’s coffers, where estimates from the governor’s office and Pennsylvania’s independent Fiscal Office say it could raise more than $200 million in the next year. This tax would be imposed in addition to the impact fee currently paid.
Marcellus Shale Coalition president David Spigelmyer said this tax would cost the state good-paying jobs and would raise home energy costs, “all while not helping a single student of school.”
“Governor Wolf claims to support energy workers and small businesses, yet he again proposes to smother this important growth sector with additional, job-crushing energy taxes,” Spigelmyer said. “Rather than growing state government and appeasing public sector unions, Governor Wolf and policymakers need to focus on job creation, especially for our building trades and the manufacturing sector, in order to grow the economy.”
Weaver expressed frustration as well, pointing to the private investment producers have made and the lack of support from state government.
“If any other potential economic contributor came to Pennsylvania with the kind of investment that has been made over the last decade by this industry, tax breaks and other incentives would be placed at their feet to encourage their growth,” Weaver said. “In the case of energy producers, however, this investment has been 100 percent private, with the zero incentives from state government.”
Encouragement toward growth is what is needed, he added.
The price of gasoline is steadily rising, and working families as well as those on fixed incomes can’t afford to see higher energy bills, Butler said. He caution that passage of a severance tax could drive production to other states where it’s cheaper to operate.
That’s what Causer doesn’t want to see.
The legislator said, “For a governor who likes to promote his support of ‘Jobs that Pay,’ I can’t help but wonder why he’s trying to eliminate thousands of good, family-sustaining energy jobs in our Commonwealth.”