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Santa and the Grinch visit Pennsylvania?s Energy Sector
The last two years brought renewed investment in Pennsylvania’s energy industry, but these shiny gifts remain threatened by grinchy taxes, fees, and regulations.
Among the gifts are the following:
- The Williams Companies’ $2.1 billion Atlantic Sunrise pipeline, which began operating in October to transport natural gas from northern Pennsylvania to Mid-Atlantic and Southeastern markets.
- Energy Transfer Partners’ $3 billion Mariner East project, which will be completed in 2019. The pipeline transfers natural gas liquids such as ethane and propane to markets in Pennsylvania, including to Delaware County’s Marcus Hook complex for processing and global distribution.
- Royal Dutch Shell’s $6 billion cracker plant in Beaver County, where construction employment is projected to reach 6,000 next year and will eventually employ 600 full-time workers.
- New Fortress Energy’s $800 million liquefied natural gas plant, whose construction in Bradford County was approved by local officials in November.
Yet, regulatory and political challenges have hexed the sector throughout the past two years. For example, both the Atlantic Sunrise and Mariner East pipeline projects experienced regulatory delays. And the Constitution Pipeline was granted a two-year extension on its federal permit because of delays in New York. The cost of such delays is significant, according to a U.S. Chamber of Commerce report. Setbacks in the $925 million Constitution project, for example, cost $3.9 million in lost gross domestic product, 23,426 in lost job-years and $930 million in lost tax revenue.
Transportation aside, producers of natural gas encountered permit delays, a proposed triple-digit permit fee increase on gas wells, and yearly proposals to raise taxes on natural gas.
Despite levying one of the highest taxes on natural gas in the nation, every budget proposal from the Wolf administration proposed a new severance tax on gas, and the state Senate proposed raising a tax on gas sold to homes and businesses in 2017. Thankfully none of these tax hikes passed.
Apart from failed tax hikes, the continued struggles of coal and nuclear energy led to calls for new energy subsidies. The Pennsylvania Energy Caucus proposed subsidies for nuclear plants threatened by the economics of low-cost natural gas. Others continued to support a decade-old program subsidizing alternative energy sources that undermine the viability of nuclear and increase the cost of energy for all Pennsylvanians.
Instead of lauding, and in some cases paying, the energy industry to create jobs on one hand and then use grinchy tax and regulatory schemes on the other, here’s how lawmakers can ensure all Pennsylvanians benefit from a safe and flourishing energy industry:
- End all energy subsidies, such as the Alternative Energy Portfolio Standards, that force electricity consumers to support unreliable, expensive alternative energy schemes that put nuclear and fossil producers at a disadvantage.
- Institute regulatory reform that seeks to work with rather than against energy producers.
- Stop viewing the natural gas industry like a money tree to band-aid budget shortfalls.
