Editorial on Gas Tax Misguided

Washington PA Observer Reporter
30 May 2010

The May 26 editorial, "Gas Severance Tax a Necessary Evil," presents some misguided claims.

The article states that Pennsylvania is only one of very few states not to impose a severance tax on its natural resources. In reality, many states, such as Texas and Arkansas, offer substantial exemptions and tax credits where drilling is difficult, similar to that found in the Marcellus Shale region. Provisions like these have not been included in the tax proposals.

By imposing a high severance tax, especially without comparable tax credits to other states, Pennsylvania will find itself less competitive in the market. A Penn State study found that Pennsylvania is successful in its drilling industry, compared to West Virginia, because of its low tax and more favorable business climate. The study also found that gas producers would not be able to pass the tax increase on to consumers because they operate in a highly competitive market.

Pennsylvania already has many strict restrictions and rules in place to ensure protection of the environment. There are 19 specific acts and laws in place that regulate the impacts of drilling in the Marcellus Shale region, and they conducted 14,544 inspections. In Pennsylvania, the DEP has over 190 employees working on oil and gas oversight. Companies are already legally responsible for any environmental impacts that might occur, and are required to repair damages to transportation infrastructure. In other words, they already put money and resources into infrastructure without a severance tax.

Natalie Rogol

Harrisburg

The writer is a research fellow for the Commonwealth Foundation.