Fact Checking Special Interests’ Attack on Natural Gas
Misinformation spewed continually at Common Cause’s press conference on natural gas campaign contributions (see CF News Release) held today at the Capital. Here are some fact checks:
First, the commonly used and misleading statement, “Pennsylvania is the only major gas producing state without a severance tax“, was frequently made.
- However, all states with difficult to drill resources, like Marcellus Shale, delay or suspend their tax until drilling companies recoup investment costs.
- Further, other states rely on a natural gas tax to lower other business taxes. In contrast, Pennsylvania already imposes on gas companies one of the highest tax burdens, and the highest effective corporate income tax rate in the world.
Second, the tax-and-regulate speakers espoused, Marcellus Shale exploration is destroying roads and the environment.
- While there will inevitably be costs to roads and bridges due the increase of usage by gas companies; drilling are required to put up bonds for all posted roads and bridges, and repair any damage they cause.
- Environmental regulations are tightly monitored by six different state agencies. Drillers are responsible for any groundwater contamination within 1,000 feet of each well.
- Additionally, a Penn State University study found that more than 95% of complaints received from homeowners suspecting contamination from gas drilling were actually due to pre-existing problems or other activities, such as agriculture.
Third, Common Cause, PennFuture, and their colleagues use the typical bogeymen – “Big Businesses” like Exxon are coming to Pennsylvania to drill and they can afford to be taxed.
- If large companies want to invest in PA, lawmakers shouldn’t target them with taxes, discouraging future investment in the state. Drillers already pay the taxes common to every other business in Pennsylvania, including – as mentioned above – a 9.99% Corporate Net Income Tax.
- There are no grounds to enact a tax on environmental concerns, especially since most of the money from the proposed tax would go to fill a state budget gap caused by overspending.
- It is more outrageous to create a tax because an industry is considered prosperous – especially from those who demand taxpayer subsidies for alternative energy companies that fund their lobbying.
Fourth, the drilling industry is winning the severance tax debate and gets everything they want.
- All the industry wants is to be treated like other energy producers in the state. Extraction of other natural resources such as solar, wind, natural gas, and coal do not face severance taxes.
- The $2-$3 million in campaign contributions is chump change, compared to the contributions of the special interests denouncing them – perhaps why Gov. Rendell and lawmakers are trying to shake-down the gas industry for more, threatening a gas tax and a moratorium on drilling.
Finally, Barry Kaufmann quoted “The secretary of DCNR said ‘the gas companies are practically laughing’ at not paying a severance tax”
- This statement was actually made by DEP secretary John Hanger, who founded the organization PennFuture, which was part of the press conference today – it sounds quite silly to site the founder of PennFuture to support PennFuture’s views.