Tax on Marcellus shale gas extraction fails to pass in PA legislature

By On November 4, 2010 9:57 am


A proposed tax on the natural gas industry is dead in Pennsylvania and may not be revived anytime soon.

Gov. Ed Rendell blamed Republicans in both chambers of the Pennsylvania Legislature for failing to compromise on a fee for the gas extracted by the myriad companies drilling in the Marcellus Shale, a rock formation rich in natural gas that spreads across Pennsylvania, West Virginia and New York.

tax cartoon 12607 Tax on Marcellus shale gas extraction fails to pass in PA legislatureWith little time left to enact the severance tax, the Senate and House Republicans’ adamant refusal to advance a meaningful counterproposal speaks volumes about their intentions,” he said. “They clearly desire to put costs of natural gas drilling on the backs of Pennsylvania taxpayers, rather than on the large multinational oil and gas corporations who stand to reap enormous wealth from our state’s resources.”

Pennsylvania is the only state with significant gas extraction that has not yet passed a tax. Since 2008, citizens and environmentalists have been pushing for a tax, saying the revenue generated could be used to hire more inspectors and mitigate some of the damage associated with drilling.

Last year, Rendell listened to industry leaders and declined to introduce a tax, saying he didn’t want to undercut an industry that was just getting started. In 2010, he seemed more willing. It became established that the resource was worth billions of dollars, and that the gas companies were hardly mom-and-pop start-ups, but were in many cases multibillion-dollar conglomerates. Also clear was the environmental damage drilling left in its wake – water contamination, fractured landscapes and torn-up roads.

But Rendell, in the last year of his last term, couldn’t get traction on the proposal, which was similar to one West Virginia has levied: 5 percent on the value of extracted natural gas, plus $.047 per thousand cubic feet of extracted gas.

On Oct. 26, days before Pennsylvanians were to elect a new governor, Rendell signed an executive order banning drilling in state forests. Already, gas companies can drill on about 725,000 of the state’s 2.1 million acres of forests. Environmentalists fear that if more drilling were allowed it would jeopardize habitat for wildlife.

Republican gubernatorial candidate Tom Corbett, currently the state’s attorney general, opposes a tax. He has collected $835,720 from gas interests, according to a Common Cause/Conservation Voters of Pennsylvania study.

His challenger, Allegheny County Executive Dan Onorato, supports a tax, and has collected $112,800 from the industry.

Rona Kobell is a former writer for the Baltimore Sun. Read more articles by this author.