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:

 

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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