Thursday, September 1, 2011

66% of Pennsylvanians Favor Gas Industry & Taxing It

A new Franklin & Marshall College poll has a fascinating set of findings that paint a complex public opinion picture.  The gas industry can take comfort from the finding that 66% of Pennsylvanians have a favorable view of it and 31% with a strongly favorable view.  But not too much comfort if it is smart.

The poll also found that a small plurality of 39% agreed that the benefits of drilling outweigh the costs, while 35% thought the environmental costs of drilling outweighed the benefits.  35% said drilling improved the quality of life and 26% said drilling reduced the quality of life.

Drilling in the state forests is a buzzsaw, according to the poll.  72% of Pennsylvanians opposed further drilling in state forests, with 54% strongly opposed.  Only 22% favored more forest drilling.

On taxation, it is tax baby tax.  65% favored taxing drilling, with 45% strongly in favor. Just 21% said they oppose taxing drilling.

Pennsylvanians have opinions that reflect the tensions, the positive opportunities, and the challenges as well.  All involved in the gas industry debate would do well to understand the complexities of this opinion picture.  See an article on the poll at


  1. I'm happy to report to the 65% that favor a tax on gas drilling that we are in fact being taxed. We pay fuel tax, income tax, payroll tax, sales tax, property tax, etc.

    I say that partially in jest, as they are of course speaking of an EXTRA severance tax or impact fee. But we have to be careful on how we craft such a tax/fee.

    As the drilling moratorium in NY is about to expire, and (more importantly) the Utica in Ohio appears to be chock full of much more profitable oil and NGL's, Pennsylvania is going to have some stiff competition for a finite amount of shale investment dollars.

    Texas, which has a severance tax, has no corporate income tax. Pennsylvania, at the other end of the spectrum, has a 9.99% corporate income tax, the highest in the nation. It also has a capital stock and franchise tax.

    If we go too crazy, the companies won't pick up and leave, but they WILL invest a lot of their dollars in neighboring states that would have otherwise been destined for Pennsylvania. If a tax is too high, you may end up pushing away enough investment that you may actually end up with LESS revenues in state coffers.

    You don't have to feed the goose that is laying golden eggs caviar every night, but if you try to feed it nothing but Spam, it may end up looking for some meals elsewhere. We're happy to pay to fix to a much better condition whatever we break and whatever extra burdens we place on local communities, but take money for state wide environmental initiatives, education, infrastructure, and the myraid of other very worthy causes out of the money we're already paying via traditional avenues.

  2. Mike forgets that almost none of the gas companies operating here pay the corporate net income tax. They are organized as LLCs and so pay the 3.07% that all Pennsylvania taxpayers do. And in Texas, the gas drillers also pay a property tax on the value of the gas in the ground. In Pennsylvania, they do not pay a property tax on the value of the gas.

    A severance tax is the only way to ensure that all Pennsylvanians benefit from the development of the valuable resource under their feet. Severance taxes are designed to provide compensation to the citizens for the removal of a non-renewable natural resource that will be used in other states.

    In all the other gas drilling states, severance taxes or fees provide revenue for education, environmental conservation and remdeiation - programs that benefit all the citizens of those states. Pennsylvania taxpayers deserve no less than the citizens of Texas, West Virginia, Louisiana, Arkansas, Alasks and the other states that impose severance taxes and use the revenue to improve the economy and quality of life for their citizens.

  3. I'm sorry Ms. Jarrett, but I respectfully disagree with you on several points.

    I do not believe all Pennsylvanians should benefit from the resources under their feet in the way you describe, simply because all Pennsylvanians do not have the resource under their feet. The Armstrong School District in Armstrong County, PA where I graduated from faced (and continues to face) very tough economic conditions. When it rained, there were a dozen trash cans under the leaks in the roof one had to dodge in the halls between class. But the mining of anthracite coal in Eastern PA did not buy us a new roof. Nor should it have.

    Here in Western PA we've dealt with the effects of other extractive industries for well over 100 years while residents all over the state have benefited from cheap, reliable electricity. As you are no doubt aware, those extractive industries come with a cost to local residents. I fail to understand how Western PA would somehow owe the Eastern half of the state something for the "privilege and pleasure" of extracting its own resources. We are the ones who are being impacted. We are the ones that have to deal with the negatives. The communities that are impacted should reap the benefits of any additional taxes or fees.

    We all (including the natural gas companies) pay into the general fund. I submit to you that general projects, such as education, statewide environmental initiatives, and environmental remediation projects should be paid for from it, not from an additional tax on natural gas extraction. Everyone in the state will ultimately benefit from cleaner air, cheaper utilities, and huge increases in traditional tax revenues.

    That being said, I tell everyone with a set of ears that PennFuture does great work and that Growing Greener should get twice the funding it had before it was cut. My father has been an outdoor writer for 25+ years for state and local magazines and newspapers. His retirement is running a river fishing guide service. I can remember driving around on Sunday mornings as a young child checking and filling acid mine remediation boxes with lime (or some other mineral if I recall correctly). We own a small camp along Mill Creek in Clarion County. It's as orange as they come, and it's a travesty.

    The causes you fight for are noble ones that have a real positive impact and I respect and admire your work. I hope you don't see my disagreement in where your funds come from as any sort of trivialization of the work you do or a lack of appreciation.


  4. A severance tax for all of the states involved is reasonable. These are tough times. While a severance tax in one state might cause players to shift their attention elsewhere for a while, they will be back. When they come back, prices may be higher and that would mean that much more revenue for the states in question.

    Arguments could be made against any taxes. Why should we pay a sales tax when we already pay income tax? Why should corporations be taxed and then their workers also get taxed?

    A tax on natural gas and perhaps an even stiffer tax on coal at the same time makes a lot of sense from an environmental perspective too. It could lead to more energy conservation.

    It is probably in the interest of the companies to have a severance tax as that gives everyone in the state a reason to support the industry. The natural gas industry will find a lot more friends in government if they are supplying major revenues each year.