A Cooked Goose Lays No Golden Eggs
Gov. Wolf continues to promote a severance tax on natural gas, even as Pennsylvania energy companies report financial losses and job reductions.
This week, Consol Energy projected a second quarter loss—largely because of low energy prices—and said it would record a significant write-down on certain oil and gas assets. Consol stock is down 43 percent over the past three months. It is cutting 470 workers across its coal, gas and corporate operations.
Numerous other energy companies have instituted cutbacks in Pennsylvania operations. Among them are Noble Energy, Chevron Corp., Universal Well Services and Halliburton.
As is often said, those who cannot remember history are doomed to repeat it. Wolf’s tax push brings to mind the federal windfall profits tax on oil companies 35 years ago.
Ignoring huge tax receipts routinely generated by the oil industry, politicians reacted to rising gasoline prices with the enactment of the Crude Oil Windfall Profit Tax Act of 1980 to punish “greedy” energy producers.
The tax depressed the domestic oil industry, increased foreign imports and raised only a tiny fraction of the revenue forecasted, according to a 1990 Congressional Research Service study.
The view that energy companies are geese with an infinite supply of golden eggs flies in the face of economic reality, and is refuted by news reports almost daily.
With such a backdrop, a Wolf energy tax won’t bring the fabled golden eggs, but could fatally cook the goose of Pennsylvania’s economy.