MAY 20, 2013 | by GORDON TOMB
Pennsylvania’s new drilling impact fee has not deterred special interests from demanding more money from the state's most prolific producers of new energy.
Act 13 of 2012 imposed fees on natural gas wells that are based on the value of the natural gas produced. The fee for the first year of a horizontal gas well ranges from $40,000-$60,000, depending on the price of gas. The state expects to collect $400 million in just the first two years of this fee.
The price of natural gas has steadily declined over the past two years due to an abundance of supply—saving Pennsylvanians hundreds on their energy bills. Now those who depend on big government are suggesting the state should base the fee on the volume of gas produced rather than on its price to get even "more" tax revenue.
John Hanger, a Democratic candidate for governor, went even further, calling the impact fee "a huge subsidy to the gas industry." A fee is now a subsidy? How Orwellian!
Claims that Pennsylvania collects less money from producers than other states are missing the big picture. Patrick Henderson, Gov. Corbett’s Energy Executive, says the critique ignores more than $1.7 billion in state taxes paid by oil and gas operators since 2007. Plus, the commonwealth’s taxation begins in a well's first year while other states exempt taxes for the initial few years, says Kathryn Klaber, president of the Marcellus Shale Coalition.
It may be fair to expect an industry to compensate for its negative impacts on local infrastructure, such as damaged roads; however, even the current impact fee goes beyond that by sending money to counties that have no gas wells.
Changing the law to maximize tax revenue would create chaos for companies doing business in the state, and would run the risk of driving the businesses themselves to other, more business-friendly gas-producing states. Despite the claims of critics, gas drilling has created tens of thousands of jobs, and provided billions to Pennsylvania residents in royalty and lease payments.
But the groups that depend on taxpayer funding as part of their business model aren't satisfied with the benefits for Pennsylvania families, they just want more for themselves.
APRIL 9, 2013 | by GORDON TOMB
One news story highlights hundreds of jobs lost and millions of taxpayer dollars down the drain via corporate welfare. Another celebrates millions of new state revenue and free market job creation. This contrast offers a lesson for lawmakers.
The closure of Pittsburgh-based Flaberg Solar, a manufacturer of mirrors for the solar energy industry, is a tragic story of job loss and taxpayer abuse. Flaberg was awarded $10.2 million in stimulus funds and received an additional $10 million in state grants, putting taxpayers on the hook for up to $20 million.
(T)he current order and market situation in the North American solar market does not offer any prospect of profitably justifying to continue [the plant's operation], said Flaberg Solar's parent company in a statement.
Flaberg Solar, which once employed 200 people, says it cannot afford to pay former workers severances owed them. Vendors stand by with uncollected receivables as the company projects a debt of as much as $7 million.
A second article reported that the commonwealth expects to collect $400 million from the Marcellus Shale Impact Fee in the first two years of the tax's existence.
Although the tax was an unnecessary money grab, its success in generating revenue demonstrates the ability of private ventures to produce thousands of jobs, economical energy and billions of dollars in wealth without government aid.
The entrepreneurial spirit exemplified in the development of Pennsylvania's Marcellus Shale is key to the higher standard of living Americans enjoy. In contrast, corporate welfare schemes like subsidies for Flaberg Solar squander capital and destroy jobs.
MARCH 14, 2013 | by GORDON TOMB
Shown this week to about 70 people at a meeting of the Tea Party Patriots of Central Pennsylvania in suburban Harrisburg, the recently released video debunks virtually everything the 2010 pop documentary "Gasland" used to demonize gas drilling in Pennsylvania and elsewhere.
For example, an assertion that gas drilling resulted in drinking water being contaminated with three types of uranium, including two of "weapons grade," is one of many ludicrous claims in "Gasland." Weapons-grade uranium, made with highly sophisticated equipment typically at the cost of many millions of dollars, does not occur naturally.
"What journalist would put that out without checking with experts?" asked McAleer, an Irish journalist, who was a correspondent for The Financial Times and The Economist before becoming a filmmaker.
"FrackNation," subtited "A Journalist's Search for the Fracking Truth," premiered Jan. 22 on AXS TV and has received strong reviews from The New York Times and National Journal. It is available for sale on the documentary's website.
MARCH 7, 2013 | by GORDON TOMB
A study reported by the Pennsylvania Manufacturers' Association says a carbon tax would have a devastating effect on the state's manufacturers.
Manufacturing output in energy-intensive activities could drop by as much as 15 percent as a carbon tax increases prices of natural gas, electricity, gasoline and other energy commodities, according to the study conducted by NERA Economic Consulting. The decline in less energy-intensive businesses could be more than seven percent, according to the study, Economic Outcomes of a U.S. Carbon Tax.
A carbon tax has been a popular proposal for combating global warming.
Key findings of the study include the following:
- A carbon tax would deal a blow to employment in Pennsylvania with a loss of worker income equivalent to 77,000 to 81,000 jobs in 2013 and 96,000 to 122,000 by 2023.
- The cost of using natural gas would increase by more than 40 percent in 2013, the first year of the carbon tax study, adding to household energy bills and increasing operation costs for many Pennsylvania businesses.
- Gas prices at the pump would jump by more than 20 cents a gallon in 2013.
- Households in Pennsylvania would see a significant increase in their electricity rates, with an average increase of 13 percent in 2013.
- By 2023, the hardest hit economic sectors in Pennsylvania would be coal, which would lose between 48 and 54 percent in economic output, and energy-intensive manufacturing, which would lose 1.9 percent, and non-energy-intensive manufacturing, which would lose between .5 and .9 percent.
SEPTEMBER 11, 2012 | by KATRINA ANDERSON
A new report shows that Marcellus Shale drillers will dole out $206 million to satisfy the state's tax (or "impact fee") on natural gas production in 2011.
- Drillers were already paying taxes and fees, and contributing to local causes.
Before Act 13, drillers paid the taxes common to every other business in Pennsylvania. Now, they pay more. Further, state law holds drillers responsible for environmental and infrastructure damages.
And companies have become an integral part of local communities. For example, Cabot Oil and Gas is actively involved in Susquehanna County where it drills. It funds a $50,000 scholarship to help students attend the Susquehanna County Career & Technology Center, participates in the Harford fair 4-H Livestock Auction, and recently contributed $2.2 million for a physician's clinic in Montrose.
- While state law requires drilling companies to repair damaged roads, many drilling companies were going the extra mile to improve roads. The Marcellus Shale Coalition estimates the industry paid out more than $200 million in privately funded road repairs in 2010 alone—as much as the "fee" generated for 2011.
- Much of the revenue generated through Act 13 isn't used to address drillings impact—Marcellus Shale isn't responsible for deteriorating bridges and parks in midstate counties where drilling doesn't even occur. Act 13 sustains unrelated programs such as Growing Greener and is littered with corporate welfare like subsidizing rail freight assistance and natural gas vehicles.
The natural gas tax will have a negative impact, whether it's through reduced investment in the state, reduction in job growth or a reduction in spending on things like road improvements and charity. Politicians shouldn't single out the drilling industry, which is creating tens of thousands of jobs, rescuing families from foreclosure, generating prosperity for small-business owners and lowering energy rates.
The Environmental Protection Agency's derailing of American's economy is frightening enough to scare even the Ghostbusters (and they ain't afraid of no ghost).
Pennsylvania will be the 7th hardest hit state by the EPA's regulatory nightmare, costing the commonwealth more than 23,000 jobs while raising electricity rates by nearly 11 percent, according to American Legislative Exchange Council.
According to Count on Coal, an organization that educates citizens on how coal keeps electricity affordable, Pennsylvania gets 49 percent of its electricity from coal and the industry generates tens of thousands of jobs. That is, until the EPA forces 10 Pennsylvania coal power plants to shut down by 2015.
The EPA's powers are being challenged by many, including Pennsylvania's governor. A coalition letter signed by Gov. Tom Corbett opposing the EPA overreach states:
...EPA's actions are adding to already overburdened state resources and are limiting the ability of states to administer their own, effective environmental programs and further slow the nation's economic recovery.
Similarly, the Pennsylvania Public Utility Commission said the EPA's approach "appears to be regulatory overkill and, more importantly, could threaten cost effective and reliable provision of electrical services in our State."
Unfortunately, the EPA has become a regime of regulations without representation. Learn more here.
APRIL 19, 2012 | by KATRINA ANDERSON
Yesterday's statement by the Pennsylvania Medical Society President Marilyn Heine should put to rest the recent panic over a provision in Act 13—the newly enacted Marcellus Shale legislation (HB 1950)—addressing physicians' access to chemical information used during hydraulic fracturing.
Dr. Heine stated [emphases added]:
As physicians, our first priority is the health of our patients. We applaud the Corbett administration and the legislature for enacting a law that forces natural gas drillers to publicly disclose the chemicals they use as part of the hydraulic fracturing process. More importantly, language in Act 13 demonstrates their concern for public safety by empowering physicians, when they need to treat patients, with the ability to obtain from drilling companies "proprietary chemical compounds" not otherwise publicly disclosed.
...We are gratified by the strong public assurances from the Department of Health, Speaker Smith and House Majority leader Mike Turzai that their intent in drafting the law was for physicians to be able to speak freely with their patients, other health care providers involved in the care of their patients, and appropriate public health officials. Those statements clearly demonstrate their commitment to the health and welfare of all Pennsylvanians.
Act 13 was not written to create a barrier between physicians and their ability to treat patients. It was intended to and does just the opposite—ensures the medical community has access to any and all information to best care for their patients.
Moreover, the language in Act 13 addressing chemicals used in hydraulic fracturing is being called "the most progressive disclosure requirements in the nation." It's unfortunate that instead of celebrating this accomplishment, anti-drilling groups try to drum up fear even when it's unmerited.
APRIL 4, 2012 | by KATRINA ANDERSON
Yesterday, the American Chemistry Council (ACC) and the Pennsylvania Chemical Industry Council hosted a forum on the benefits of natural gas for Pennsylvania's manufacturing sector.
David Taylor of the PA Manufacturers' Association commented that Marcellus Shale is the closest thing Pennsylvania will get to "manna from heaven." On top of creating tens of thousands of jobs in Marcellus Shale related industries, lowering utility bills, and generating fortunes for farmers, workers and small-business owners, shale drilling is helping to revitalize the manufacturing industry.
As the chart below highlights, ethane, a byproduct of natural gas development, is used to make a host of manufacturing products. The ACC credits the construction of new chemical plants, including Shell's proposed Pennsylvania cracker plant that's expected to generate 17,000 new jobs, to "affordable and abundant domestic shale gas."
Abundant natural gas production has significantly reduced the energy costs associated with manufacturing. However, the panelists were clear that this is a competitive market, and Pennsylvania should continue to address its business climate -- the commonwealth has the 10th highest state and local tax burden out of the 50 states -- and refrain from hand outs to politically favored companies, ensuring businesses compete on a level playing field.
MARCH 13, 2012 | by KATRINA ANDERSON
Yesterday, I had the pleasure of speaking to Tea Party Patriots of Central Pa on environmental aspects of natural gas drilling in Pennsylvania and new Marcellus Shale regulations and taxes in Act 13 (formerly House Bill 1950).
I was joined by the talented journalist and documentary filmmaker Ann McElhinney - she produced Not Evil Just Wrong, a response to Al Gore's An Inconvenient Truth. Ann was talking about her new project FrackNation, a documentary that will tell the truth about fracking. You can learn more about FrackNation here.
MARCH 6, 2012 | by KATRINA ANDERSON
A new study by the Manhattan Institute confirms that forcing states to purchase renewable energy hurts taxpayers.
Pennsylvania is one of the 29 states (as well as the District of Columbia and Puerto Rico) that has a renewable energy standard -- Pennsylvania calls it an "Alternative Energy Portfolio Standard." These mandates force utility companies to produce a percentage of their electricity from renewable energy sources, such as wind and solar.
Given that state solar energy is at least 10 times more expensive than electricity from natural gas, it is not surprising that forcing companies to use it drives up costs.
- In 2010, residents in states with renewable energy mandates on average experienced electricity prices 31.9 percent higher than in non-mandated states. Similarly, commercial rates were 27.4 percent higher, and industrial rates were 30.7 percent higher.
- Of the ten states with the highest electricity prices, eight have RPS mandates: Hawaii, Connecticut, New York, New Jersey, New Hampshire, Rhode Island, Maine, and California.
- Of the 10 states with the lowest electricity prices, only two have RPS mandates. They are Washington and Oregon.
This is more evidence that should lead state lawmakers to oppose increasing state solar mandates bill, which would force Pennsylvanian families to pay millions more for electricity.