PA’s Natural Gas Industry is a Target – Again

Member Group : Jerry Shenk

Regrettably, I don’t own acreage in Pennsylvania’s Marcellus Shale region. But, then, neither do Pennsylvania’s governor, most legislators, public employees or citizens.

Few Pennsylvanians have paid a dime for private land under which Marcellus Shale natural gas energy assets lie, assumed the risk costs of exploration, leases and drilling, or covered the direct costs of payroll, extraction, transporting or distributing them.

Some Pennsylvanians purchase Marcellus Shale natural gas for cooking, hot water and seasonal heating, but pay for the gas only after it’s been produced, delivered, metered and invoiced. Natural gas is the Commonwealth’s most commonly-used fuel source for generating the electricity Pennsylvanians use.

The natural gas industry pays the same Pennsylvania corporate taxes as other businesses, plus impact fees on drilling operations, mostly to local governments. Marcellus zone gas producers have proven to be good neighbors.

Clearly, they must be punished.

Harrisburg budget season is here, so gubernatorial tax increase proposals abound, and natural gas is in the crosshairs – again.

Claiming Marcellus energy assets as “ours,” Governor Tom Wolf and fellow collectivists annually eye an additional tax on gas producers. Unsurprisingly, Wolf’s latest budget proposal includes one.

As Pennsylvania’s hottest industry and employers, Marcellus gas producers are highly-visible, easy targets.

But, there are lots of easy targets.

As examples, Pennsylvania might levy extra taxes on ice cream, movie tickets or seats at Phillies and Pirates games. But, then, because the tax is built into their prices, fewer Pennsylvanians could enjoy ice cream, see popular movies or go to the ballpark.

Business taxes drive up prices, limit consumer access and eventually damage, even destroy enterprises, industries and jobs.

The natural gas market is no different. And natural gas, the electricity it generates, and the products derived from petrochemicals are far more essential than ice cream, movies and ball games.

This year, Harrisburg partisans are applauding Gov. Tom Wolf’s seventh consecutive budgetary proposal for a gas extraction tax.

But, why throw more tax money at the same politicians who have already squandered $billions with which they were foolishly entrusted rather than pressuring them into making hard decisions to straighten out the fiscal messes they’ve already created?

In 2013, after decades of paying high gasoline taxes supposedly earmarked for infrastructure, Pennsylvanians were burdened (incrementally) with even higher gasoline taxes to pay for long-neglected infrastructure maintenance and improvements. Today, the Commonwealth’s gasoline tax rate is among America’s highest, yet Pennsylvania’s state road system is still among the nation’s worst.

Who genuinely believes Harrisburg would spend natural gas taxes more responsibly or effectively?

The natural gas industry is criticized for giving politicians campaign money, even though many other special interests, public employee unions especially, give far more.

But, there’s a difference. The gas industry fears being pillaged by kick-the-can-down-the-road, money-grubbing, profligate state politicians facing revenue shortfalls and ever-increasing funding demands from generous special interests.

In the case of natural gas producers, think of campaign contributions as “protection money” the way a small bar owner or grocer in a mob-controlled neighborhood would when a mob capo enters his/her business, looks around and says, “Nice place you got here. It’d be a shame if anything happened to it.”

All that prevents the threat of punitive taxation from being properly identified as “extortion” is the political immunity assumed by public “servants” who insult our intelligence by telling us “it’s for the people” or “the kids,” when it really serves to cover the profligacy of officeholders, buy votes and/or reward their political paymasters.

Harrisburg politicians – both parties – have overcommitted and overspent for decades. But, last year, a COVID-related recession exacerbated by Governor Wolf’s over-long emergency declarations, shutdowns and restrictions enabled politicians to deceive us about the historical reasons for Pennsylvania’s financial problems.

Don’t be fooled.

Levying new taxes only worsens economic uncertainty. Instead, Pennsylvania should consider (among other remedies):

  • Abolishing prevailing wage laws to save 10-15 percent on infrastructure improvements.
  • Producing royalty revenues by issuing leases on state-owned land in the Marcellus zone.

By the way, why does Pennsylvania own more than four million acres of land? Why not sell some of it? That way, as the hacks run out of land to sell, they would be forced to solve problems they should have addressed years ago – or, better yet, avoided.

Meanwhile, let’s keep their grubby paws out of our pockets and off Pennsylvania’s natural gas industry.