UNDATED – Governor Tom Wolf’s proposal to raise energy taxes could threaten Pennsylvania’s natural gas industry — that is the position of the Marcellus Shale Coalition, responding to Wolf’s budget talk last week.
Dave Spigelmyer, president of the coalition, says adding a severance tax, as Governor Wolf has suggested, would be a disadvantage and eventually could pull the industry out of the Commonwealth, “A lot of folks will say that the gas is here and they aren’t going anywhere. Well, I’ll tell you, we had 138 rigs operate here in early 2012, and now we are down to less than 50. We need to nurture this industry while it is still in its very foundation to help it dig its roots and create opportunities for Pennsylvanians through affordable energy.”
Wolf proposed a 5% severance tax, along with 4.7-cents per thousand cubic feet of gas extracted. It is a plan almost identical to one West Virginia has in place. Spigelmyer says, “The extraction tax, the West Virginia model he [Wolf] proposed, is equivalent to an 8% extraction tax rate. He talks 5%, but if you use the West Virginia model, they have a 4.5 cent rider per Mcf, and if you look at the sales points for natural gas, that is an 8% equivalent severance tax rate for the primary dry gas production region of the US.”
Spigelmyer says the natural gas industry already contributes corporate net income tax and an impact fee to the state. He believes Wolf’s plan send a strong signal to natural gas companies that maybe another state would be more welcoming than Pennsylvania. Spigelmyer was a recent guest on On The Mark, which you can download here. (Sara Bartlett)