Failing to Pass a Severance Tax…

Below some comments from the press and PennFuture about the state of the State’s budget sans a tax on drilling.

Inaction on drill tax has a bad odor to it
Sunday, October 24, 2010
By Brian O’Neill, Pittsburgh Post-Gazette

…. Its [PA's Legislature] latest gaffe is passing on collecting tens of millions of dollars in revenue from the oil and gas industry, which is making huge money in our state (and passing a good bit of it around Harrisburg). Nearly all of the nation’s natural gas comes out of the ground in states that have severance taxes, but we won’t have any….

Bill Holland is associate editor of Gas Daily, which covers the natural gas market in North America. He said, “Industry analysts have never been very concerned” about paying a tax in Pennsylvania. Even the House bill passed largely by Democrats last month wasn’t that big a deal, Mr. Holland said. “They expect a tax eventually — like there is everywhere else drilling occurs,” he said.

It’s not as if profit margins are low. Mr. Holland pointed to Chesapeake Energy’s recent statement that its break-even selling price for drilling Marcellus Shale gas is $2.45 per thousand cubic feet, and Friday’s closing price for gas futures was $3.35. Now drillers don’t have to worry about even a pin scratch on that pretty price spread….

To read the full opinion online, click here:

http://www.post-gazette.com/pg/10297/1097325-155.stm

PennFuture’s Drilling Fact of the Day

October 22, 2010
The refusal of the Pennsylvania Senate leadership to consider a severance tax bill leaves Pennsylvania citizens in the lurch, with a $70 million hole in this year’s state budget, and with local communities holding the bag on covering the public safety and social costs that drillers bring with them….

To read the full PennFuture Drilling Fact of the Day, click here:

 

Keep the Promise Town Hall-PA Severance Tax!

September 9, Thursday— Keep the Promise Town Hall in Jersey Shore, Lycoming County between Williamsport and Lock Haven, 7:00-9:00 p.m.
Robert H. Wheeland Center, 1201 Locust Street, Jersey Shore, PA 17740 (part of Citizens Hose Company, Station 45)
Date: August 30, 2010 12:56:46 PM EDT
Subject: PennFuture event in Jersey Shore 09/09
I wanted to reach out to you as individuals and leaders of your organizations to invite you to an upcoming town hall meeting in Jersey Shore. We appreciate the help and support you have provided on many issues around clean water and responsible drilling in the past.
As you are probably aware, funding for the Growing Greener program is expiring. To make matters worse, the Environmental Stewardship Fund, which also funds  Growing Greener, has been diverted away from local projects.  There are many projects in north central PA and around the Commonwealth that were made possible due to this funding source. Some of you may have played a key role in these projects.
PennFuture is hosting a town hall on the severance tax and uses of the revenue on Thursday evening, September 9, in Jersey Shore.  We are calling our series of these events around the state the “Keep the Promise Tour” as we are asking members of the PA General Assembly to keep the promise they made in July to have a severance tax agreement by October 1. Below are the details on the event. We expect the following folks to attend among others: Reps. Mike Hanna, Garth Everett and Rick Mirabito; Commissioner Joel Long from Clinton County; Dave Rothrock from PA Council of TU; Tim Schaeffer from the Fish and Boat Commission; and several folks discussing value of Growing Greener funding for the area.
We would welcome attendance by your members and any promotion of the event that you can provide.  We ask that folks who attend the event register through our web site at the link below.
September 9, Thursday— Keep the Promise Town Hall in Jersey Shore, Lycoming County between Williamsport and Lock Haven, 7:00-9:00 p.m.
Robert H. Wheeland Center, 1201 Locust Street, Jersey Shore, PA 17740 (part of Citizens Hose Company, Station 45)

Gas and Taxes

Pennsylvania and New York are the only two oil and gas producing states which don’t levy a severance
tax. In Texas (the Barnett Shale) they don’t have a state income tax thanks to their severance tax and in
Alaska not only do they not have a state income tax but every resident gets an annual check.
Pennsylvanians may not be able to secure the same benefits as Texas or Alaska but why wouldn’t we
want to get something out of this?
Having a Severance tax in place is of the utmost importance. Without one we are left to deal with these
questions. Should the highly profitable gas industry or Pennsylvania’s tax payers foot the bill for proper
monitoring and inspections? What about the damage to our roads, contaminated well water and
pollution to our beautiful streams and forests? Who should reap the most benefit from Pennsylvania’s
natural gas – outside speculators or its citizens? Is there a reasonable alternative to a severance tax for
achieving any of this? The gas industry pays as little as it can for our gas, shouldn’t we be
taxing their profits at the highest rate we can? Isn’t the Marcellus Shale, and more importantly the land
and people above it, worth just as much as the Barnett Shale?

Most of us are aware that Pennsylvania has not enacted a Severance tax yet. If your not familiar with this issue or have not looked into it for a while then this should help get you updated on it
The Pennsylvania Legislature is debating whether the state should levy a severance tax on the extraction of natural gas to help reimburse state and local governments for environmental, infrastructure, and societal costs imposed by the industry. Until recently, Pennsylvania has had a modest natural gas extraction industry…. One of the central claims of critics regarding the proposed tax is that it is unneeded as drillers here “face the highest corporate tax rate in the nation.” A closer look at the evidence shows that this is not the case for most companies. In fact, the drillers of more than 70% of the wells in the Marcellus Shale will pay the state’s 3.07% Personal Income Tax (PIT) rather than the 9.99% Corporate Net Income Tax (CNIT).i The following table lists all companies with permits to operate wells in the Marcellus Shale and highlights the firms that are paying the lower PIT rate. ….
To read the rest of this report and view the table, click here:

http://pennbpc.org/sites/pennbpc.org/files/Over 70 Percent of Marcellus Shale Wells Pay PIT.pdf

Gas tax makes sense

http://www.philly.com/inquirer/opinion/20100118_Editorial__Gas_tax_makes_sense.html

Nice editorial from the Philadelphia Inquirer about taxing the energy companies for drilling int he Marcellus Shale in PA.

Marcellus Shale Muster!!!

Marcellus Shale Muster – January 30, 2010

A Muster to build a strong coalition
in support of a natural gas extraction tax and protection of public forest and park land

Nittany Lion Inn, State College, 10:00 a.m. to 3:30 p.m.

Join the fight to:

  • Require big drilling companies to pay a severance tax on the extraction of Marcellus Shale gas so we can invest in the land, water wildlife and communities “hosting” the drilling;
  • Protect the precious resources our state forests provide and stop them from being treated like an ATM machine, by imposing a moratorium on further leasing of public land for gas drilling until we know the environmental and economic impacts;
  • Ensure that the Oil and Gas Lease Fund is used primarily for conservation purposes so our children are left with more than empty gas wells and degraded public lands.

We cannot do this alone. We need you to join the campaign to ensure that gas drillers pay their fair share to the people of Pennsylvania for the use of their natural and community resources and to gain adequate protection of our state forest and park lands.

At the Summit you will:

  • Hear from key legislative leaders about the importance of a severance tax on natural gas drilling;
  • Get a briefing about the challenges of managing gas drilling on state forest and state park land;
  • Learn how profitable the Marcellus Shale deposit is for gas drillers;
  • Find out how volunteers are becoming watch dogs;
  • Find out how you can help build a strong campaign.

Cost to attend the Muster is $25; registration is required. Click here to register toda

Fighting climate change with natural gas

http://news.yahoo.com/s/ap/us_us_energy_shift

Here’s a link to an article from the Associate Press that was headlined on Yahoo’s! homepage this morning. Natural gas is finally getting as much media play as reality television programs and Hollywood scandals. That’s good, but not all the publicity shows a true persepective of what’s at stake. This article doesn’t even mention the negative impacts on the environment and communities in the area where drilling is taking place. I don’t think that was the point of the article so I won’t call the Associated Press a lot of nasty names. But, the article does explain a lot of what our country is up against as far as climate change goes. We need to change the way we produce energy; we need to do it quickly; we need to do it cheaply. Natural gas is looking like the best option for that at this point and despite the down side(s) of the gas industry, I don’t think we will be able to fight the idea of tapping into this energy resource  to make the rest of the globe happy as well as prolong our ability to live life as we have known it on this planet.

At this point it would make all the more sense to see some severance taxes, higher well bonds, ANY waste water disposal management plans and safer methods for hydro-fracking of wells. I always wonder if any of the folks who write up these articles live in any of the states where the drilling is going on. Do they have a well in their back yard and a contaminated water well?

Next Years Severance Tax (better late than never?)

House to focus on drilling issues next year

by robert swift (harrisburg bureau chief)
Published: December 1, 2009

HARRISBURG – House Democratic leaders are making taxation and regulation of natural gas drilling in the Marcellus Shale formation top priorities next year.

The effort will get started with statewide hearings by the House Environmental Resources and Energy Committee and House Democratic Policy Committee, said Majority Leader Todd Eachus, D-116, Hazleton.

A renewed push to enact a state severance tax on gas production as well as legislation to address drilling-related issues ranging from protection of water supplies to royalties for landowners is part of the legislative focus.

“We are going to take up the issue of the Marcellus Shale extraction tax,” added Eachus in a recent interview. “We really think the development of the Marcellus Shale should have a social benefit.”

Interest in the impact of drilling activities in the Marcellus formation underlying Northeastern and Central Pennsylvania built steadily this year stemming both from fiscal concerns over the large state revenue deficit and environmental concerns highlighted by the recent federal lawsuit by 15 families in Susquehanna County alleging that Cabot Oil and Gas Corp. damaged their health and property.

Earlier this year, Gov. Ed Rendell proposed a five percent severance tax modeled on the West Virginia levy while the Department of Environmental Protection hired additional gas well inspectors with revenue from a fee hike on oil and gas exploration permits.

Rendell eventually said it would be premature to implement a severance tax for fiscal 2009-10, but House Democrats rallied behind the idea and included it in their version of the budget bill. The final $27.8 billion budget is without a severance tax. This is mainly due to because of opposition from Republican lawmakers who said a tax would discourage drilling companies from creating new jobs.

Rendell thinks the timing is right to include a severance tax as part of the 2010-11 budget, said John Hanger, acting Secretary of the Department of Environmental Protection.

“The governor is open to what the details of the severance tax would be,” he added.

One unresolved issue is the distribution of severance tax revenues.

“My (bill) would devote gas revenues to both the municipality and the county where natural gas is extracted, the Liquid Fuels Fund (for local road work), as well as to LIHEAP (low-income heating), environmental stewardship and state government,” said Rep. Camille George, D-74, Houtzdale, the environmental panel chairman.

Other drilling issues await Harrisburg’s attention.

George wants action to protect the existing 12.5 percent royalty to property owners for gas production on their land. He is awaiting a decision from the state Supreme Court on whether the royalty is to be calculated after deducting post-production expenses such as processing, marketing and transportion from the producer’s proceeds.

Do you know what the Oil & Gas Fund is?

The Oil and Gas Lease Fund Act was created in 1955. As I understand it, the money that goes into this fund comes from the leasing of state land to gas companies (except game lands) for gas drilling. The money in this fund is only to be used for conservation programs that might include things like building or fixing state parks, dams and flood control, purchasing land, and maybe fixing up any messes the gas industry makes, etc. Follow this link for a better explanation.

http://www.landandwater.org/oilgasfund.html

The state of Pennsylvania needs money. At one point Governor Rendell voiced his approval of a severance tax, which would put money from the leasing of state land back into a variety of funds, including DCNR, DEP and other conservation organizations like the fish and game commission. Over the past month or so he seems to have changed his mind. He no longer supports a severance tax. He has stated that he feels it would hurt or disable the gas industry at such an early point in their endeavor. (PLEASE!) So he has laid out some other options for making money instead. One of them is to take funding from the Oil and Gas Lease Fund and put some of that money into the the general fund. There are two ways to do that and they are both explained in the above link.

There is also some discussion of the same thing in the below article from Pennlive.com. I have to say, despite some of the referencing to what the republicans want versus what the democrats want, I find that this really isn’t (or shouldn’t be) about political parties. This issue is about people who pay taxes in the state of PA (that’s all of us). It’s about Pennsylvanians caring for and appreciating their forests and streams. It’s about wanting to have a safe and healthy place to hunt and fish, paddle, hike, bike and camp. It’s about being responsible to ourselves as tax payers and public land users. I feel that the politicians who represent us, especially here in Tioga County, forget that they have their offices because we chose them to do a job for us. Let’s keep reminding them to do it right.

http://www.pennlive.com/editorials/index.ssf/2009/10/the_biggest_loser_in_pennsylva.html

We’re All Voting for No-Sylvania if We Remain Silent

A friend sent me this article this morning. I liked it and even though a lot of what makes people agree with one side or the other comes from opinions as to what is best for the state of PA…..there are too many legislators who can only see a resource in dollar signs. Yesterday I called my state representatives, Scarnati and Baker, to let both of them know that I was supportive of a severance tax and wanted the money from that tax to be put into a budget where the majority of those funds would be distributed amongst the agencies that care for our natural resources. DCNR, The Fish and Game Commission and other organizations that act as stewards for our forests and streams. I spoke to each representative’s  secretary and neither were very helpful. Both made a note of my concern but with an air of unimportance and Matt baker’s secretary tried to tell me that they would not be voting on any such bill that might make amendments to a House bill that would distribute money in the way I have described above, but there is one and I’m not the only “lunatic tree hugger” that knows about it.
Our legislators are doing us a huge dis-service by not listening to our voices and opinions and they’re intent seems to be to sell out the PA Wilds to the gas and oil industry to make a quick buck. There are a few folks in politics doing their best to change this tide but they may not be enough. They are making an effort to fight for all of us. To keep our rights of land and tax money as ours, the people of Pennsylvania, and we should do all we can to help them out by calling or writing to our local representative, Matt Baker, and make sure he understands that we care about our land and our water. Make sure he knows that we know what’s going on and we do have an opinion and if he wants to actually represent the people in his district, as his title proclaims, then he needs to listen and think and do his job and not just vote with the flow when he gets to Harrisburg.
By Jan Jarrett (President and CEO Citizens for Pennsylvania’s Future (PennFuture)
Published: September 30, 2009

If the state budget negotiators have their way, the core of what makes Pennsylvania, Pennsylvania – our forests, which gave us our very name – will be destroyed. All because our elected officials are unable to stand up to the million dollar lobbyists of the gas and oil industry.

It all started when Gov. Rendell released his original budget, way back in February. As part of the austerity budget, Rendell said that these bad economic times called for new sources of revenue. And one of the sources Rendell was offering was to charge a severance fee on the natural gas that was being extracted from the Marcellus Shale formation.

This was hardly a radical stance. Every other major gas-producing state has such a fee, including the radical outposts of Texas, Louisiana and Arkansas. And the multi-national corporations who dominate the drilling industry happily pay the fee in all those other states. So the severance fee was a no brainer, at least initially. The only disagreement was where the money would go – all to the general fund, or with some reserved for the local communities that “host” the drillers, the environment, and our fish and boat and game commissions.

But that was a million dollars ago. Once the tassel-shoed lobbyists of Chesapeake Energy, Range Resources, Conoco Phillips and other drilling-related business interests got their sticky fingers into the budget negotiations, suddenly these gas drillers were an “infant industry” and any severance tax would kill them as sure as a stake through their cold hearts. It turns out that the lobbyists were really good at their jobs. When the doors to the backroom blew open, the budget proposal not only had no severance fee, it required the Department of Conservation and Natural Resources (DCNR) to give a sweetheart deal to the industry, opening up huge swaths of our state forest to drilling.

And what a sweetheart deal it is. With natural gas prices at a record low, DCNR may well be forced to sell drilling leases in our state forest lands at rock bottom prices. And not just a few leases, either. Because the proposed budget relies on drilling in our state forests to bring in $65 million in just the first year, and $180 million next year, as many as 200,000 acres would have to be leased out, just for the drilling pads and immediate area.

What does that mean in real trees? Of the 2.1 million acres of state forest land, only 1.5 million are within the Marcellus Shale region. More than 660,000 of those acres are already available for drilling and 595,000 are environmentally sensitive areas that cannot be leased. That only leaves approximately 225,000 acres of state forest land that could be leased. So leasing 200,000 acres would mean very few trees would be left standing.

The actual amount of forest disturbed would actually be much greater. Building drilling pads means cutting roads through the forest – roads to be used by hundreds of trucks hauling the millions of gallons of water the special deep drilling and rock fracturing needs to reach the Marcellus Shale gas. And pipelines must be built across the forest to carry the gas to market.

So the state forest will soon look more like the state checkerboard, with a few trees separating the drilling operations.

But just turning our state into No-Sylvania isn’t the end of the mischief the budget negotiators have planned. Leasing the state forest to the gas industry will not bring in enough money to make up our budget shortfall. For that, the negotiators are turning to the folks with really deep pockets: bingo players and concert goers. The budget proposal calls for new taxes not on the multi-national gas companies, but on small games of chance – like the bingo games the local volunteer fire departments hold to raise money, and on theatre and concert tickets. In short, the folks without lobbyists.

This plan to destroy our forests and rob the poor to protect the rich multi-national gas industry can be stopped, by only with enough citizen outrage that the legislators turn this bad deal down. All in all, that would be better than having to come up with a new name for our state.

(PennFuture is a statewide public interest membership organization, founded in 1998.)

You Have a Voice so Use it!

Hello folks!

I don’t like to tell other people what to do and this blog is supposed to offer information and not too of my blabber….but if you have time today please, please call Senator Scarnati’s office and let him know that you want him to support Amendment 3916 to House Bill 1489 (the severance tax bill). I just called this morning and it was very simple and easy to do. In fact you are welcome to call all your state reps and let them know the same thing. You’ll find a link to a page with that info on it below.

This is the number for his office. 717.787.7084. The secretary will answer and all you have to do is tell her your name, where you are calling from and let her know which amendment (use the number above) you want him to support for which bill (also using the number from above). There is a good chance this might pass this week and if they do not hear from us then it will be tough for him to represent us, which is what he is supposed to be doing.  If you call Matt Baker’s office they will tell you that there is nothing certain to be voted on this week. That may very well be since they are still ironing out the budget, but you can still call and let them know where you stand on a severance tax. If you want more info about the severance tax please check out this site.

http://www.pennfuture.org/media_sd_detail.aspx?MediaID=1058
Here are some details on this amendment and bill that are being passed.

Please call your state representative ASAP. Tell them to support Amendment 3916 to House Bill 1489 (the severance tax bill). This amendment by Rep. Dave Levdansky substantially improves the bill by increasing support for the Environmental Stewardship Fund (aka Growing Greener) and the Fish and Game Commissions in the long term.

A vote in the House could happen this week so please contact your representative soon. Go to the upper right corner of http://www.legis.state.pa.us to find your legislators.

Detail:

House Bill 1489 presently would establish the natural gas severance tax and dedicate 15% of it to Growing Greener, which is running out of money. The Fish and Game Commissions would receive an additional 2% each for habitat and public access work. Amendment 3916 would increase the dedicated amounts to 20% for Growing Greener and 3% for each of the commissions.

(Amendment 3916 is sensitive to present budget shortfalls by directing more severance tax revenue to the state’s General Fund this year and in 2010-11. This is a far better way to deal with the shortfalls than rushing to lease more publicly owned State Forest for gas drilling without respect for good science and principles of sustainable management of the forest.)

For general information on the natural gas severance tax and drilling impacts, go to http://landandwater.org.
Thanks to all who attended the waterdogs meeting last night and thank you for calling. If you need a phone stop by my store and you are welcome to use the shop phone, free of charge!

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