Natural Gas Economic Impacts

Member Group : Commonwealth Foundation

Contact: Nathan Benefield 717.671.1901 | [email protected]

Natural Gas Drilling in Pennsylvania

CF Policy Brief Highlights Economic and Environment Impact

HARRISBURG, PA — The Commonwealth Foundation today released Pennsylvania’s Natural Gas Boom: Economic and Environmental Impacts, a policy brief on the growth
in natural gas drilling in the Marcellus Shale and the proposed severance tax on the industry.

"Pennsylvania is positioned to greatly benefit from the booming gas industry," write Katrina Currie and Elizabeth Stelle, the brief’s co-authors. "A short-sighted proposal to garner more state revenue through a severance tax on natural gas would negatively impact the industry’s development and stunt Pennsylvania’s economic
recovery and growth."

Findings of the report include:

Marcellus Shale activity is adding thousands of jobs to Pennsylvania during a recession, and Pennsylvania is one of a few states where drilling is expanding.

Properly drilled and operated wells significantly mitigate environmental threats.

There is no conclusive evidence that hydraulic fracturing has caused contamination of drinking water in Pennsylvania. In the last 15 years, 32,000 wells were drilled
and there have been fewer than 80 cases (0.25%) of groundwater impacts from drilling (and no health impacts).

In order to protect local roads, drilling companies are required by state law to post bonds for any roads with municipal weight limits. The drilling company pays for
road conditions to be inspected before and after drilling, and is responsible for fixing road damages. This ensures that no additional tax dollars are needed for road
repairs due to drilling activity.

States with a natural gas tax often delay implementation, offer tax exemptions or credits, or discount the tax in hard-to-drill areas to encourage drilling. Texas and
Arkansas reduced their severance tax for high-cost gas wells by nearly 80%.

"Politics and the desire for more revenue are driving the severance tax – rather than legitimate economic and environmental concerns associated with natural gas
drilling," said Matthew J. Brouillette, Commonwealth Foundation president and CEO.

"The evidence is in the fact that Gov. Rendell’s proposal would send 90% of the revenue to the General Fund – taxing a growing industry to continue subsidies for
other special interests."

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The policy brief, Pennsylvania’s Natural Gas Boom: Economic and Environmental
Impacts, by Katrina Currie and Elizabeth Stelle, is available online and by calling
717.671.1901. Click here for more CF research on natural gas drilling, severance
taxes, and energy policy.
The Commonwealth Foundation ( is an independent,
non-profit public policy research and educational institute based in Harrisburg, PA.

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