Last gasp for shale tax may have arrived
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What this state needs are better poker players.
Republicans now rule Harrisburg. They already controlled the state Senate, and now they've added the House and the governor's chair.
Governor-elect Tom Corbett pledged to impose no new taxes, which will be quite a feat with federal funds drying up. The state deficit next year has been estimated at anywhere from $2 billion to $5 billion.
This is where poker comes in. Because Pennsylvania is holding a winning hand but doesn't seem to know how to play it.
To see it, look no further than the 2,000-plus members of the oil and gas industry who crowded the David L. Lawrence Convention Center this week to discuss "all things Marcellus." It's the second annual DUG East conference, the acronym standing for Developing Unconventional Gas.
Pennsylvania is sitting on the biggest natural gas field outside of Iran. New (and controversial) horizontal drilling techniques have brought a boom that is already crowding out traditional Canadian suppliers of gas to the Northeast.
And longtime industry watchers can hardly believe Pennsylvania hasn't yet imposed a severance tax on natural gas drillers the way that big Republican states out West have. Kevin Book of Clearview Energy Partners wrote last week that "it may still be too soon to say Pennsylvania will end 2010 as the sole U.S. natural gas producer state without a severance tax."
Mr. Book suggested that, if Mr. Corbett were elected, the easiest way for statehouse Republicans to help him keep his promise not to raise taxes "may be to do it on somebody else's watch." In other words, impose a tax before Mr. Corbett takes office so he doesn't have to wear it.
That makes sense. Right now, the only two places with a humongous natural gas field and no gas severance tax are Pennsylvania and Fantasyland. It's not as if this multibillion-dollar industry is going to pack up its piping and go home if there's a tax. That's traditionally been the cost of doing business.
But state Senate Republicans thus far have blocked a worthy severance tax. Their spokesman, Erik Arneson, said Wednesday that they're sticking to a pledge not to have a "lame-duck" legislative session this year to revisit the issue.
"That will not change," Mr. Arneson said.
What's curious about this hard line is that it is of no obvious benefit to the Pennsylvania consumer. Ordinarily, increased costs in the form of taxes can be passed along through increased prices, but that's not easy to do here.
First Published November 4, 2010 12:00 am
