Wednesday, June 29, 2011

State Budget Makes Drilling Tax Issue Totally Toxic For PA Gas Industry

Just how toxic?  See today's massive Philadelphia Daily News story at

Huge cuts to education and no drilling tax have created a fireball of public anger and a lot of  public anger is falling on the gas industry.  The gas industry for more than a year has been split on the question of the drilling tax, with companies like EQT, Range, and Chesapeake publicly indicating support for one.  The failure to pass a drilling tax last October after the House Democrats passed it twice in 2010 remains a disaster for the state and the industry.

Governor Corbett is proudly and primarily responsible for the drilling tax not passing now when it could have played a role in preventing massive education cuts. The Governor adamantly opposes a drilling tax and threatened to veto even an impact fee if it was part of the budget.

The only winners in this circumstance are House and Senate Democrats who now have an enormous issue gift wrapped for them.

What comes next? The drilling tax issue will not go away.  It will just get hotter and insiders are saying something will be done in the Fall. 

Meanwhile the public overwhelmingly sides with laid off teachers, children losing kindergartens and schools, and taxpayers facing rising property taxes to make up partially for state education cuts.


  1. John,

    Thanks for mentioning that many in the industry have stated publicly (for quite some time now) that we are more than willing to take on some sort of impact fee/tax.

    I wish your colleague Ms. Jarret would extend us the same courtesy. While PennFuture consistently extolls the virtues and environmental upsides of natural gas drilling, she criticizes the industry for the lack of a tax with the same consistency as if we were unilaterally (and vehemently) opposed to it. I wholeheartedly endorse the wonderful work they do at PF, but I fear that the light they are choosing to cast the industry in on this issue does nothing but feed anti-gas drilling sentiment and gives legitimacy to those such Josh Fox, Ian Urbina, and the rest of the populace who want to see drilling banned in its entirety.

    So again, as usual, thanks for putting things into the proper perspective.


  2. Mike:

    Not painting with a broad brush and differentiating is hard for a lot of people to do. So often I hear the "environmentalists..." Or the "gas industry..." I do think understanding each other and the differences that exist is important. When communicating, I also think it is important to identify common ground even when there is a lot of disagreement.

    Consider this:

    Jan Jarrett and PennFuture are savagely attacked by some on the right and when Josh Fox was recently in Harrisburg, PennFuture was attacked by his supporters. Fox's supporters booed the name of PennFuture and said it was not a real environmental organization.

    PennFuture is supporting strong regulation and a drilling tax, and that riles up the right. It has not supported a moratorium on private lands and that is why it is attacked by those who want to shut the industry down. PennFuture also attended the House Republican news conference to support the bills that would increase the use of natural gas in vehicles. It also has strongly supported converting old coal fired power plants to gas. It is working hard to support the EPA proposed Air Toxic rule that would close old coal fired power plants and increase natural gas demand more than any other measure--1.2 tcf.

  3. John,

    I couldn't agree with you more. I do not envy the position that PennFuture is in right now. While representing my view, your view, and the views of the vast majority of Pennsylvanians (support gas drilling with strict regulation and an equitable tax), they are constantly catching grief from the loud extremists on both sides of this issue. I make little distinction between the likes of Grover Norquist and Josh Fox. Extremism on either side of the isle should be dismissed.

    Penn Future has been the voice of reason and consensus is this debate, which is why I was caught off guard by some of the comments made by Ms. Jarrett on this specific issue. I am assuming they were made out of frustration, and I still support PennFuture 110%. It would be tough for me to think of an organization that has made more of a positive impact on this state. It's a real shame that Fox is willing to throw the TRUE environmentalists under the bus to further his agenda. But I'm sure it came as no shock to you. It sure didn't to me.

  4. I've spoken to a number of legislators who have told me they're trying to defend the drilling industry by opposing a strong tax. Sen. White is one of them - why don't EQT, Range, Cheasepeak and Knapp Associates help him and others out and go on record to support strong gas tax bills like HB 33, or SB 352?