Gas industry figures against proposed tax

A severance tax would be bad not only for the natural gas industry but also for the economic future of Pennsylvania, industry experts said.

The group of officials with gas industry groups were united Thursday in their contempt for the tax that they claim would be burdensome and unfair and discourage drilling in the state in coming years.

Stephanie Catarino Wissman, executive director of Associated Petroleum Industries of Pennsylvania, was among those speaking to newspaper reporters during a teleconference call.

“We are absolutely against any severance tax,” she said.

Take a look, she said, at the positive impact the gas industry has meant to the state since drilling began. To introduce such a tax, she noted, would be crushing for the economy.

The gas industry already pays its fair share of taxes and endures burdensome regulations, according to Wissman.

Gov. Tom Corbett opposes additional taxes on gas drilling operations. His opponent, Democratic nominee and York businessman Tom Wolf, was reported by Philly magazine to support a 5-percent severance tax.

Lou D’Amico, president and executive director of the Pennsylvania Independent Oil & Gas Association, said a severance tax unfairly targets the gas industry. While Pennsylvania remains the only state where drilling occurs without such a tax, most states that impose it on drillers also offer them various types of exclusions.

A severance tax will mean less investment and drilling, leading to higher overall unemployment, D’Amico said.

Dave Spigelmyer, president of the Marcellus Shale Coalition, noted that the number of gas drilling rigs in the state already has dropped. For now, natural gas production remains high, however, partly because the means of pulling gas from the ground has improved.

“Capital will move very quickly from Pennsylvania if we set up an uncompetitive tax situation,” he said.

Spigelmyer stopped short of predicting that a severance tax will bring an end to drilling in the state.

“I don’t think anyone is saying they (companies) will pull out,” he said.

But he pointed out that Pennsylvania continues to lag well behind most other states as a viable place for investment and cannot afford to be uncompetitive with places such as Ohio where drilling occurs.

He called shale development the economic bright spot for the state. And, he noted that the impact fee imposed on gas drilling already has generated more than $600 million since it was enacted in 2013.