Big Oil’s tax tears come from the smoke it’s blowing

Posted by By at 14 June, at 16 : 36 PM Print

The Pennsylvania Senate Environmental Resources and Energy Committee was slated to take on the issue Tuesday morning of whether and how much to charge Marcellus shale drillers for their operations in the Commonwealth.

President Pro Tem Joe Scarnati, R-Jefferson County, has proposed assigning an impact fee starting at $10,000 a well, then increasing according to the price of natural gas and how much gas is produced. An amendment proposed by Sen. Mary Jo White, R-Butler County, would start the fee at $40,000 and gradually reduce it – to zero at the end of 10 years.

A Quinnipiac University poll published Tuesday morning shows Pa. voters favor Marcellus profits over environmental impact by about 2-1. By even greater margin, they favor taxing the gas derived from Marcellus drilling, and that includes Republicans, who polled 59-33 percent in favor of taxing the product.

Meanwhile. Republican Gov. Tom Corbett and the industry continue to oppose the tax, amid claims that if Pennsylvania starts taxing Marcellus gas, the industry will take its jobs and shove them – presumably to some other state.

If we are to believe the Big Business mantra, we could easily infer that if business tax burdens were reduced to zero, employment would, within weeks, jump to 100 percent.

Meanwhile, Congress granted an extension in January of a Bush-era tax cut, amid assurances by those most benefited that it would create jobs. My Navy retirement check took a $50 a month hit, and the jobs, so far, have not appeared. What happened?

In Pennsylvania, Marcellus Shale drillers are pushing the idea that if they are taxed, they will forsake the largest share of the largest carbon-fossil fuel source since oil was discovered in the Middle Eastern deserts. In other words, if we Pa. residents want a cut of the profits in return for allowing carbon fuel producers to tear up two-thirds of our state, they’ll just leave.

Consider, please:

  • New York, Ohio and West Virginia sit on the edges of the shale deposit, and have relatively little gas available, compared to what is under Pennsylvania;
  • Proximity to a huge customer base between Boston, Mass. and Washington D.C. is part of what makes Marcellus natural gas so profitable. It’s a safe bet that any tax or impact fee Pennsylvania would levee would easily be overshadowed by a) the cost of building pipelines to those customers from Ohio and W. Va. PLUS b) loss of income from the Pa. source.

Add in an eternal truth.

Business does not pay taxes. Ever. (Well, hardly ever.)

Taxes levied on any business are passed along from the producer or manufacturer to become part of the price at the check-out line, and then consumers pay taxes on that.

Business, after all, is in the business of making money. In a 2009 address at Stanford University, BP’s then-CEO Tony Hayward stated the company’s primary goal was “to create value for our shareholders.” He had just led a purge of environmentally focused employees who were, he said, paying too much attention to “trying to save the world” and not enough to increasing company profits.

That, of course, was before a series of cost cutting measures blew up a BP rig in the Gulf of Mexico, coating shoreline from Louisiana to Florida with 2.6 million-plus year-old Miocene oil.

Marcellus production has brought money and jobs into the state, at least for awhile. In a few years, the wells will be drilled and require only minimum crews to watch over them. Eventually – estimates are offered from 50 to 100 years – the gas will be sucked out and the cash flow to Pennsylvania will stop entirely. (On the other hand, there may be more gas deeper down, so maybe there are more profits down there.)

In return, the industry has created some serious water pollution. The Department of Environmental Protection has levied record-breaking fines and required the offending companies to provide bottled drinking water to area residents.

Drilling proponents, including former Gov. Tom Ridge, repeatedly tell us there has never been harm to major rivers, such as the Delaware and Susquehanna, proven to have been caused by the drilling process. History repeatedly tells us those proofs may take decades to appear.

There was a time when landfill builders said the same thing. Eventually, small locally-owned restaurants were drawn into lawsuits because landfills did cause problems and the restaurants had supplied trash to be deposited there. Taxpayers, through the EPA Superfund, spent piles of money remediating problems.

And if the best – meaning “nothing bad” – happens, a tax or impact fee now should at least provide money to fund DEP’s future activity, and to provide training to Pa. residents who will be out of work when the wells all are drilled and producing and only require maintenance crews to keep them operating.

One major question: How much money do the companies think they will lose if we tax them that makes it worth the millions they spend on lobbyists and television ads trying to convince us not to.

Note: political news service reported Tuesday evening the Environmental Resources and Energy Committee voted 11-0 to move Scarnatti’s bill, with Whites amendment, onto the Senate floor for discussion. More amendments likely will be presented, but it’s a start.

Photo by Tom Owad


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This post was written by:
- who has written 169 posts for Rock The Capital
John Messeder is an award winning journalist with more than 35 years experience writing about education, environment and local government issues. He has lived in Maine, Florida, California and Alaska, and, by temporary turns, numerous places in between. John also is an accomplished photographer, and avid hiker, conservationist, oral history buff, and author of several books he has not yet got 'round to writing. He lives in Adams County, Pa., just over a hill from Gettysburg, with his wife and Golden Retriever. He may be contacted at - Email jmesseder

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