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.

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