 |
| PA Gov. Tom Corbett |
Wonder why the Pennsylvania's legislature and governor last week approved a state budget that slashes funding for education and social welfare but ignores an obvious source of offsetting revenue--a tax on natural drilling industry?
Wonder no more.
The
Times-Tribune's Harrisburg bureau chief Robert Swift
reports today that the
natural gas industry spent more than $3.5 million last year to lobby lawmakers and state officials.
That's more than three times the amount spent by the casino industry, over the same period, to influence the influential.
All that lobbying cash not only squashed hopes of enacting a drilling tax but apparently also stymied every other major legislative initiative that the industry disliked.
Swift reports that:
"While the Marcellus drilling boom led to a slew of bills dealing with matters ranging from greater protection for water supplies, a moratorium on natural gas drilling in state forests and state safety inspections of gas pipelines, only two became law in 2010. These are narrowly drawn measures to provide more public access to well production data and make landowners who lease land for natural gas drilling subject to roll-back taxes..."
"The natural gas industry has decided it's better to spend money on lobbying and campaign contributions than to pay a severance tax, said Rep. Greg Vitali, R-166, Havertown, sponsor of a severance tax bill.
"That $3.5 million figure is staggering," he added. "It isn't the type of spending you would find from fledgling companies."
But it is the kind of spending that gets results--and the industry sure got it's money's worth last year.
Here's a list of the gas industry's top lobbying spenders:
- Marcellus Shale Coalition: $1.1 million
- Range Resources Appalachia: $392,000
- Chesapeake Energy: $382,000
- Pennsylvania Independent Oil and Gas Association: $247,000
- East Resources Management: $225,000
- Chief Oil and Gas: $186,000
- Alpha Natural Resources: $160,000
- Dominion Transmission: $146,000
- BG North America: $124,000
- Equitable Gas Co.: $78,000
- Columbia Gas of Pennsylvania: $75,000
- Cabot Oil and Gas: $50,000
- Pennsylvania General Energy: $48,000
- National Fuel Gas: $36,000
- Anadarko Petroleum: $21,000
What's your view on this? Let us know in the comment box below. If you don't see one, click the tiny 'comments' link to open it.
-------------------------------------------------------------------------------------------------------------
Try it free for 30 days! No obligation. Cancel anytime with one click.
Frank - do you think these campaign contributions had nothing whatsover to do with weak State regulations of the gas indsutry?
ReplyDeleteOr exemptions from federal envionemntal laws?
Or the rush to adopt flawed DRBC regulations and lift the DRBC moratorium?
This is the Heart of Darkness - coruption at its core.
from a british perspective: it scares me!
ReplyDeleteIf you put a limit on the amount of money that can be used by each candidate, then there is a level playing field and the (probably) best person will win and who is hopefully not a corporate toy.
why does it not scare US citizens that elected officials are filling their boots (with cash and other goodies), while joe public gets screwed?
This is what the UK sees:
http://www.guardian.co.uk/world/2011/jun/21/verone-one-dollar-robbery-healthcare
Good question. Americans follow every movement of professional athletes but appear to be in a coma when it comes to many political issues, including campaign funding. A Supreme Court ruling allowing politicians to use millions from groups shrouded in secrecy hardly caused a stir here. I hope the populace is more awake in Britain.
ReplyDeleteGee, let me guess: Lobbying? Ding! (OK, where's my prize....)
ReplyDeleteI hate seeing slashes to education funding and effective programs so if PA can recognize additional revenue (beyond what the Marcellus has already provided, which is significant but probably hard to detail) without any real disruption of the activity that would be good. I don't know that drilling is the best place for that tax though. Perhaps earlier on, during the leasing phase would work, but perhaps we're too late for that. I'd like to hear some opinions from people regarding what would be an appropriate stage to tax. Also, are these companies not already taxed on gas/fluids sold?
ReplyDeleteI believe this type of work already brings in a ton of money for this state and without the high tax's put on them they are able to keep hiring workers which to this day is about 48000. This state always seems to try to punish every successfull company with their old-school tax policies that does not but put money into the Politicians pockets to waste and drive good companies elsewhere.
ReplyDeleteFrank has made a few good points. But over the next few years the Marcellus gas play industry will be the largest industry in PA if it isn't already. The two digit millions of $$ of political donations compared to the billions of $$ of generated cash flow each year from this industry is chicken feed and they have a right to lobby and protect the industry exactly like the teachers unions, AARP, etc.
ReplyDeleteI believe there is no present gas tax due to:
1. The states unemployment has been dropping due to this industry.
2. Let the energy companies have a little more time to sink their roots in PA to prop up the unemployment, increase cash flow within the state and continue to construct facilities they require to work out of. Let them continue to invest for their stockholders and citizens of PA.
3. I have spoken to some of the energy companies - the present price of natural gas is around $4.00 per million BTU's and is expected to increase by 10 to 14% in 2012. This possible increase will allow them to invest even more in our commonwealth. During the last decade the price went up to $8 and $10.00/MMBtu's. In a nutshell - the price at $4.00/MMBtu's is very low and causes great risk locating and drilling for the gas. They could make a lot more profit right now drilling for oil - but have ventured to PA, OH, WV and to a smaller extent in NY to withdraw a much cleaner energy than crude oil.
Post Comment:
The bulk of my comments were based on - "Why I believe there isn't any Marcellus gas play taxes" - just my opinion based on tracking the industry.
I am in favor of taxes comparable to other states and the protection of our enviroment. I fully expect some type of tax will be in place late this year or early next year.
Severance Tax is NOT INCOME Tax and you still have to pay all federal and state income taxes on oil and gas income in addition to severance tax. States generally base their calculations on the value of the oil produced, the volume of oil produced, or some combination of these. Various incentives through credits or lower tax rates are often allowed in situations where the tax rate might be burdensome enough such that wells might be plugged and abandoned. Examples might be: periods of low commodity prices, low production stripper wells, or with fields deemed as enhanced oil recovery projects. Sounds like you are hating the very industry that is providing opportunities! Do not bite the hand that feeds you those beans and franks. The O&G firms do not dictate how much your elected officials add various taxes/schemes to pay the social entitlements of that state. Allocation of the receipts of said revenues are something that Due Diligence would resolve in knowing how your state applies those revenues.
ReplyDeleteSince every other gas producing state taxes the natural resource that is removed from their state, the gas producers expect to pay a tax as part of doing business. It is only fair since they are removing a precious commodity from PA, residents of PA should get something in return for it.
ReplyDeleteI'm not a fan of more taxes just to have more services or better state employee pensions, but putting taxes towards educating our children is a worthy cause that will pay dividends in the long run.
For Mr Brill:
ReplyDeleteIn the UK there is a prescribed budget that each candidate can spend and if that person/politician over spends on his/her campaign, then they get investigated and if they are found guilty that person gets sent to jail (not sure if you lose). It almost happened to a banking millionaire (Mr. Zac Goldsmith MP) who ran in during 2010 election.
It is a bit ironic that the US politician who talk about efficiency are more than happy waste billions on presidential campaigns, over $2billion each in the last election. that type of money could rebuild Haiti, probably twice!!!
regards,
a concerned Brit
With regard to UK fracking, it resulted in minor tremor near the test spot (near Blackpool, North West Coast) about 3.1 on the Richter scale! Also, the chemicals used need to be registered prior to use to ensure that pollution does not occur which is luckily hampering this stupid idea.
But it surprises and keeps me awake (sometimes) that a country like the USA could easily provide all it's energy requirements using concentrating solar power technology that already exists why go down this highly polluting road. the USA has a desert, consider yourselves luck and use it rather than build a pipeline to pump water from another river to the nevada river to ensure that the Hoover dam continues to run, raw stupidity. Is there any sensible person in a position of power in the USA that is not bribed by oil/gas/coal, the evidence sadly suggests this is not the case!
Finally, have a look at the subsidies that the US government gives to energy generation (excluding present bioethanol techniques, which are silly), it will surprise you!
Maybe I missed something but where are the tax breaks? My company and employees pay state income tax. We pay tax on every new car & truck we buy. We pay to register them. We pay sales tax on what we buy. All of this has increased since the marcellus. Our employees and others in this industry are paid well and we don't need to live on beans and franks except on the 4th of July. Our industry needs more employees. Eventually a small severance tax could actually create a win/win but ONLY if half of it goes to local govt. If it all goes to the pit in Harrisburg it will be wasted as much of the other tax revenue is.Where is all the money the state got on lease sales and the royality income they get?
ReplyDeleteThis is an issue that needs to be carefully considered, whether a certain percentage of the tax will be spent on infrastructure and education in the traditionally under served areas where the gas is actually coming from, areas that also suffer from having land tax base decreased by the high amount of state land ownership (thus removing land from tax base). Or just going into the general fund which I am reading is the goal of our Representatives form the urban centers of Pittsburgh and Philadelphia.
ReplyDeleteWhile I'm not opposed to a "use" tax where the money goes to the community where the drilling occurs, I am opposed to simply taxing an entire industry to make up for budget shortfalls. I send my kid to private school, cause the public school is horrible, and pumping more money into it isn't going to help it. I see the commercial real estate development around Pittsburgh and this state is full of Marcellus Multiplier jobs (who also pay taxes). The taxing of an industry is just wrong. What if we said "hey, let's put a tax on any software companies that sell software in Pennsylvania"...it would sound crazy.
ReplyDelete