“Irresponsible to Forgo a Drilling Tax” Says PA Budget & Policy Center

On Thursday, June 9, 2011, Michael Wood, Research Director of the Pennsylvania Budget and Policy Center testified before a House Democratic Policy Committee Hearing on Marcellus Shale in Philadelphia. To read the complete text of Woods’ testimony, visit: http://www.pahouse.com/PolicyCommittee

Here, a few highlights:

“We are a little over 3,000 wells into the development of the Marcellus Shale in Pennsylvania. With it brings wealth, employment opportunities, and economic change to areas of the state that have been largely passed over in recent history.

“This, however, is only part of the story. We have all heard stories of damaged roads, increased traffic congestion, air and noise pollution, well blowouts, wastewater spills, lack of adequate water treatment facilities. Local officials in these areas talk of greater demands for police and emergency services, hospitals, and affordable housing.

“Then there are the effects we do not know, such as what the impact of having 30,000, 40,000, or even 50,000 shale wells will have on our health air, water, wild spaces, and way of life.

“Pennsylvania has been down this road many times before. Our history has seen the original oil rush 150 years ago on, along with timber, and coal. Each of these events brought fabulous wealth (for some), jobs, development, and a legacy of environmental damage, some of which – like orphaned wells and acid mine drainage – we are still dealing with.

“We have a choice in Pennsylvania – responsible development, with necessary regulations and safeguards to protect the health and welfare of Pennsylvanians, or a “gold rush,” where natural gas prospectors swarm into the state, take the resources, and leave the rest of us holding the bill for repairing the damage and re-orienting our economy in a post-drilling age.”

~

“…the development of this one-time resource has state-wide impact that will otherwise be paid by all taxpayers over many years.

“That is why every major gas producing state levies such a tax or fee. This is not some out of the mainstream idea. Actually, we are out of the mainstream now by giving this industry a relatively free pass.”

~

“Numerous, independent studies have shown that drilling taxes have little impact on oil and gas production.”

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“The Vitali plan raises the most revenue both on a per well basis and over the 2011 to 2015 period, providing the largest funding stream for state and local governments and for environmental protection.”

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“The Reality May Not Live Up to the Hype”

“The development of the Marcellus Shale will create jobs and generate tax revenue, the question is how much.

“We hear news reports of jobs created and new taxes being paid due to the development, but digging deeper, we find these claims are inflated.

“In recent weeks there have been many news reports and talking points saying 48,000 jobs being created due to the Marcellus Shale activity since 2009. This is an embarrassing misinterpretation of an official statistic. The 48,000 figure is ‘new hires’, not net job creation.”

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“We welcome the jobs the activity is creating, but the high-paying industry jobs are a much smaller piece of the pie, and we need a better understanding of that.”

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“It is irresponsible to forego a drilling tax based on the promise of jobs and increased tax payments from related businesses, leaving the tab to generations of Pennsylvanians.”

~

“Conclusions
The responsible development of the Marcellus Shale could be a powerful economic engine for Pennsylvania – as long as it is managed in a way that the health and welfare of Pennsylvanians, the rich diversity of our environment, and the fabric of our communities are not endangered. Despite billboards and TV ads, the oil and gas industry’s narrow financial interest is focused on maximizing their bottom line. Once the gas is gone, the drillers move on to the next deposit.

“Pennsylvania needs to protect its own interests – for safe roads, clean air and water. A drilling tax is a key piece of this. By providing funding for health care, schools, parks, and environmental protection, a drilling tax can help pay back every Pennsylvanian for this one-time resource and help safeguard the Pennsylvania we all know and love for our children and grandchildren.”

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