One news story highlights hundreds of jobs lost and millions of taxpayer dollars down the drain via corporate welfare. Another celebrates millions of new state revenue and free market job creation. This contrast offers a lesson for lawmakers.
The closure of Pittsburgh-based Flaberg Solar, a manufacturer of mirrors for the solar energy industry, is a tragic story of job loss and taxpayer abuse. Flaberg was awarded $10.2 million in stimulus funds and received an additional $10 million in state grants, putting taxpayers on the hook for up to $20 million.
(T)he current order and market situation in the North American solar market does not offer any prospect of profitably justifying to continue [the plant's operation], said Flaberg Solar's parent company in a statement.
Flaberg Solar, which once employed 200 people, says it cannot afford to pay former workers severances owed them. Vendors stand by with uncollected receivables as the company projects a debt of as much as $7 million.
A second article reported that the commonwealth expects to collect $400 million from the Marcellus Shale Impact Fee in the first two years of the tax's existence.
Although the tax was an unnecessary money grab, its success in generating revenue demonstrates the ability of private ventures to produce thousands of jobs, economical energy and billions of dollars in wealth without government aid.
The entrepreneurial spirit exemplified in the development of Pennsylvania's Marcellus Shale is key to the higher standard of living Americans enjoy. In contrast, corporate welfare schemes like subsidies for Flaberg Solar squander capital and destroy jobs.
A study reported by the Pennsylvania Manufacturers' Association says a carbon tax would have a devastating effect on the state's manufacturers.
Manufacturing output in energy-intensive activities could drop by as much as 15 percent as a carbon tax increases prices of natural gas, electricity, gasoline and other energy commodities, according to the study conducted by NERA Economic Consulting. The decline in less energy-intensive businesses could be more than seven percent, according to the study, Economic Outcomes of a U.S. Carbon Tax.
A carbon tax has been a popular proposal for combating global warming.
Key findings of the study include the following:
- A carbon tax would deal a blow to employment in Pennsylvania with a loss of worker income equivalent to 77,000 to 81,000 jobs in 2013 and 96,000 to 122,000 by 2023.
- The cost of using natural gas would increase by more than 40 percent in 2013, the first year of the carbon tax study, adding to household energy bills and increasing operation costs for many Pennsylvania businesses.
- Gas prices at the pump would jump by more than 20 cents a gallon in 2013.
- Households in Pennsylvania would see a significant increase in their electricity rates, with an average increase of 13 percent in 2013.
- By 2023, the hardest hit economic sectors in Pennsylvania would be coal, which would lose between 48 and 54 percent in economic output, and energy-intensive manufacturing, which would lose 1.9 percent, and non-energy-intensive manufacturing, which would lose between .5 and .9 percent.
"Promised Land," Tinseltown's recent take on natural gas drilling, opened in theaters across the nation this past weekend. Despite a cast of heavy hitters, including Matt Damon, the film grossed a meager $4.3 million (10th place).
Patriot-News columnist Donald Gilliland wasn't impressed either. He encourages audiences to go to a matinee or wait for the film to come out on DVD. Apart from criticizing the "art," he finds the film lacks any semblance to the reality of drilling in Pennsylvania, writing, "The anti-fracking politics of the film are no less misleading than Josh Fox's "Gasland" documentary, but more ham-handed."
New York Post film critic Kyle Smith agrees, calling it "a groaner of an agenda movie" and a film that "gets so cheesy that I suspect it was also secretly funded by Velveeta."
To figure out if the film does in fact reflect rural Pennsylvania, we talked to a real-life land man (similar to Matt Damon's character) Mike Knapp who tells us:
The first two acts of the movie do a pretty good job of accurately portraying land men. Butler [Damon's character] is very caring about the landowners and has full faith that his company is doing the right thing.
But Knapp finds the movie misses the mark when it comes to portraying the drilling process and local landowners:
They [landowners] come across as inarticulate and irresponsible. In one instance, a landowner goes out and blows his check on a Corvette. For folks where the difference between a $100 gas bill and a $200 gas bill can mean not paying other bills, I think it is pretty obnoxious for Mr. Damon to Mr. Krasinski to say you can drill a well on your property because they don't think it is a good idea.
For more on how oil oligarchs and Pennsylvania taxpayers funded the film click here and here. For facts about the benefits and risks associated with natural gas drilling check out Truth, Lies & Answers on Natural Gas Drilling.
There's a memorable line in Promised Land, the new Matt Damon movie opening Friday about a gas drilling company buying land rights in a declining farming community. One character fighting the industry's arrival tells Damon, who plays the gas industry's morally ambivalent landman, "We're not fighting for land, Steve--we're fighting for people."
It's a pity, then, that the Middle East-funded film takes such an anti-people approach to fracking. The film assumes that gas drilling is bad for the environment, laying waste to land and livestock, and that the industry preys on a suffering community's desire for wealth and good schools just to turn a profit.
So far, so Hollywood. Big industry rarely gets more than this false celluloid caricature, even though in Pennsylvania, fracking has created over 102,000 jobs, lowered utility bills, and helped real farmers like Bradford County's Jim VanBlarcom, who was able to double his dairy herd size by leasing his land. And contrary to popular belief, fracking has not contaminated the water supply.
Moreover, the gas industry has boomed without taxpayer subsidies and paid all the taxes common to other businesses plus a special impact fee. That's the double irony of Promised Land: It isn't only anti-people on fracking, it's anti-Pennsylvanians because of the Film Tax Credit used to fund its Pittsburgh-area filming.
Pennsylvania taxpayers doled out more than $4 million through the Film Tax Credit for the movie. For those unfamiliar with the Film Tax Credit, it is unique among tax breaks in that it is "transferable." That is, even if the production company (in this case, Gramercy Productions) doesn't owe any state taxes, they can sell the remainder of their tax credit to another company.
We've noted how corporate welfare for Hollywood studios doesn't "create" any jobs, but shifts economic activity from one area to another. A tax break for one industry requires higher tax rates on everyone else, hindering job creation in every other sector of the economy—which hurts Pennsylvanians everywhere.
In real life, natural gas drilling has revitalized communities across Pennsylvania and helped people to better lives and incomes. For more stories of families benefiting from gas drilling in Pennsylvania, check out The Real Promised Land .
The shale gas boom has boosted the economy in key battleground states like Ohio and Pennsylvania, which may help President Obama, despite his hostility towards fracking—the process which made the gas boom possible.
A new short documentary featuring CF's own Matt Brouillette, the Dinosaur Election, discusses this potential irony and the threats a radical anti-fracking agenda present to our prosperity.
A new anti-fracking movie, Promised Land, is set to release in a couple of months, but controversy around the movie is already in full swing.
The film has come under fire because one of its financiers is a state-owned enterprise of Abu Dhabi. The Abu Dhabi government-owned oil company operates in direct competition with American gas and oil, which has become more accessible and lower priced thanks to fracking. In other words, oil barons in the Middle East are partnering with Hollywood to attack the greatest energy boom in a generation.
But Promised Land's problems aren't isolated to questions over the film's financiers. Phelim McAleer explains:
I broke the news that "Promised Land" was about fracking and now I can reveal that the script's seen some very hasty rewriting because of real-world evidence that anti-fracking activists may be the true villains.
In courtroom after courtroom, it has been proved that anti-fracking activists have been guilty of fraud or misrepresentation.
There was Dimock, Pa. - the likely inspiration for "Promised Land," which is also set in Pennsylvania. Dimock featured in countless news reports, with Hollywood celebrities even bringing water to 11 families who claimed fracking had destroyed their water and their lives.
But while "Promised Land" was in production, the story of Dimock collapsed. The state investigated and its scientists found nothing wrong. So the 11 families insisted EPA scientists investigate. They did - and much to the dismay of the environmental movement found the water was not contaminated.
Hollywood is the land of fiction, so no one should be surprised when a movie like Promised Land attempts to construct a story that isn't based on fact. Unfortunately, the stars in Hollywood and Middle East emirates are not the only groups engaging in a frack attack.
The reality is far different than the Hollywood portrayal of the fracking bogeymen. Fracking in Pennsylvania has created jobs, lowered utility bills, and contrary to popular belief, has not contaminated the water supply.
Yesterday, I had the pleasure of speaking to Tea Party Patriots of Central Pa on environmental aspects of natural gas drilling in Pennsylvania and new Marcellus Shale regulations and taxes in Act 13 (formerly House Bill 1950).
I was joined by the talented journalist and documentary filmmaker Ann McElhinney - she produced Not Evil Just Wrong, a response to Al Gore's An Inconvenient Truth. Ann was talking about her new project FrackNation, a documentary that will tell the truth about fracking. You can learn more about FrackNation here.
A job-killing Marcellus Shale tax is being rammed through the legislature right now! With great speed and little transparency, House Bill 1950 was turned into a job-killing tax, littered with corporate welfare and handouts.
See our video discussing the tax
Corporate welfare highlights in the bill:
- $6.3 million to Environmental Stewardship Fund (Growing Greener) through fee; then in 2013, it redirects $20 million from the Oil and Gas Lease Fund -- otherwise dedicated for state parks and forests.
- Growing Greener has been use to subsidize solar and wind projects, and even advocacy groups like PennFuture.
- Growing Greener has been use to subsidize solar and wind projects, and even advocacy groups like PennFuture.
- More than $11 million over three years to bribe the Shell cracker plant to the state.
- Nearly $20 million over three years for natural gas vehicle development.
- $1 million for rail freight assistance.
- Beautification project grants, via Commonwealth Financing Authority!
Here's my letter to the editor in the Public Opinion responding to Matthew Major's fact-deficient editorial on drilling:
Matthew Major's editorial on corporate welfare and best drilling policies scrapes the bottom of the content barrel, failing to accurately explain either topic to readers.
"Corporate welfare" is taking tax dollars and giving them away to fund otherwise unprofitable businesses like Solyndra. Major is calling for singling out the drilling industry -- which is creating tens of thousands of jobs, rescuing families from foreclosure, and generating prosperity for small-business owners -- to impose yet another tax on it.
Pennsylvania already has the 10th highest tax burden in the nation, and the drilling industry pays the same taxes as every other business in the state. This amounts to more than $1.3 billion in state taxes since 2006. Other states that have natural gas taxes have friendlier business climates-for instance, Texas and Wyoming have neither income nor corporate taxes.
Major's line about legislators sacrificing the environment for drilling - straight from the anti-drilling, frackophobic handbook -- is based on emotion, not science or experience. The Department of Environmental Protection continually evaluates and improves regulations to ensure protection. Even a cursory review of the Governor's proposed drilling regulations shows the new rules are far from the industry handout Major claims. Most of the setback requirements and bonding requirements exceed those of neighboring states.
Gov. Tom Corbett is pushing for a principled natural gas impact fee where local governments can charge a fee if a driller is not paying for its impacts. Unfortunately, special interest groups, tax-and-spend politicians, and Major unwisely see the industry as a cash cow for unsustainable statewide projects. People should not lose out to bad policy and the politics of fear.
Lieutenant Governor Jim Cawley is the latest guest on The BOX Podcast hosted by Matt Brouillette.
They discuss Marcellus Shale misconceptions, Gov. Corbett's impact fee, and the vast potential for job growth Marcellus represents.
Click here to listen online or to download The BOX Podcast.
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The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.