Political Gas

Posted by By at 4 November, at 22 : 35 PM Print

by Eric J. Epstein

The question is when – not if – natural gas extraction  will be subject to an assessment. Drilling comes at a price,  and a severance tax looms as next year’s budget deficit is already starting to bake The remaining questions are  how much, what form, and who will benefit from drilling revenues.

The core issues are how to balance support of a nascent industry without smotherizing its growth, but  accounting for immediate and delayed externalities. We  need to invest in a balanced approach to mineral extraction,  and plan for the impact drilling will have on local  communities and waterways. We can not usurp and ignore the rights of local government.

The partisan divide in this imbroglio epitomizes a larger problem within our culture when it comes to  discussing and mapping out public policy: Content and  substance take a back seat to vitriol and cataclysmic  predictions. Most of the blood letting is taking place in  Harrisburg, far from where the jobs, infrastructure, and  environmental impacts will actually occur.

Extreme divisions drive us to an ideological abyss.  We need to acknowledge that drillers won’t pack-up and leave  their investments behind, but the tax structure must not impose growth handcuffs.

Nor will gas drilling mirror the anthracite experience.  Pennsylvania did not become Sodom and  Gomorra after  the arrival of horse racing, the lottery, and slots. Likewise,  Marcellus shale is a political fact of life that will not usher in environmental Armageddon.

But we must be mindful of the past.

We know what happens when coal companies abandon mines. Rate payers remain at significant  financial risk as our  nuclear stations continue to store radioactive waste with no forwarding address.

The recent spills of about 8,000 gallons of “fracturing”  chemicals by Cabot Oil & Gas in Susquehanna County should serve as a canary in the gas mine. Let’s try something different,  and learn from previous mistakes we made in mining coal and  bailing out nuclear plants.

Mineral extraction must be buffeted by sensible  environmental stewardship and balanced revenue strategies.  We can’t tax our way into prosperity, but we should not sell off our resources without factoring externalities, cleanup  costs, and water use.

Among the proposals we should consider to foster an  equitable compromise include: a graduated severance tax; accelerated depreciation; establishment of an external sinking fund for cleanup costs and site remediation; MOU’s between  the state and local municipalities for revenue sharing; true up costs for water use; and, an arbitration panel to reconcile local land use with state mandates.

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