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If you listen, you can hear the laughter coming out of the Petroleum Clubs in Houston and Dallas over the Pennsylvania Senate's budget proposal, backed by Governor Wolf, to trade basic environmental protections for a pathetically weak severance tax proposal.
On top of the current impact fee, the around 1% severance tax proposal would put a total of a roughly 3% tax on gas and oil production in the Commonwealth, about half of the average rate of the dozen major oil and gas producing states.
Any oil and gas financial analyst will tell you that production costs in Pennsylvania's Marcellus formation are below most other shale plays, pipeline and export facilities are being built to export half of the gas produced in the US, and Marcellus regional hub prices will merge with the National Henry Hub prices as the pipeline capacity increases.
Yet even in a budget crisis, Pennsylvania is not only too timid to go for a top producer state tax rate, but as part of the deal, is ready to hand authority over oil and gas permits from the PADEP to our lobbying-immune state senators, and let private contractors, hand-picked by the well operators, review permit applications with the right to fast-track them even if projects pose environmental risks and operators omit key information in applications.
Sounds like a fine deal for our benefactors and partners in Texas. It looks like the PA House won't sign onto this travesty of a bill, though of course not due to environment concerns, more likely because they still buy into the baloney that the tax will have a significant impact on where well development dollars go.
Meanwhile gas production from PA goes up, impact fee dollars go down, and there's that other brilliant Senate budget proposal to put a 5.7% tax on Pennsylvania NG consumers.
At least the antics of our "leadership" are good for some mirth in dining rooms and corporate office suites back in Texas. Here it's not so funny.
Ralph Kisberg
Williamsport
Submitted by Virtual Newsroom