3 Reasons Marcellus Gas Tax Misses Mark

A new report shows that Marcellus Shale drillers will dole out $206 million to satisfy the state’s tax (or “impact fee”) on natural gas production in 2011.

The tax-eaters will surely surface shouting their “fair share” mantra, demanding the industry pay even more. But consider these three under-reported facts:

  1. Drillers were already paying taxes and fees, and contributing to local causes.

    Before Act 13, drillers paid the taxes common to every other business in Pennsylvania. Now, they pay more. Further, state law holds drillers responsible for environmental and infrastructure damages.

    And companies have become an integral part of local communities. For example, Cabot Oil and Gas is actively involved in Susquehanna County where it drills. It funds a $50,000 scholarship to help students attend the Susquehanna County Career & Technology Center, participates in the Harford fair 4-H Livestock Auction, and recently contributed $2.2 million for a physician’s clinic in Montrose.

  2. While state law requires drilling companies to repair damaged roads, many drilling companies were going the extra mile to improve roads. The Marcellus Shale Coalition estimates the industry paid out more than $200 million in privately funded road repairs in 2010 alone—as much as the “fee” generated for 2011.
  3. Much of the revenue generated through Act 13 isn’t used to address drillings impact—Marcellus Shale isn’t responsible for deteriorating bridges and parks in midstate counties where drilling doesn’t even occur. Act 13 sustains unrelated programs such as Growing Greener and is littered with corporate welfare like subsidizing rail freight assistance and natural gas vehicles.

The natural gas tax will have a negative impact, whether it’s through reduced investment in the state, reduction in job growth or a reduction in spending on things like road improvements and charity. Politicians shouldn’t single out the drilling industry, which is creating tens of thousands of jobs, rescuing families from foreclosure, generating prosperity for small-business owners and lowering energy rates.