Higher Energy Taxes Will Hit Shale’s Supply Chain the Hardest

The shale supply chain in Pennsylvania is supported by more than 1,300 diverse businesses, providing jobs with good wages and benefits for hardworking Pennsylvanians. But persistently low commodity prices are driving a downturn in shale activity, affecting communities, working families, and the small and mid-sized businesses that support responsible natural gas development.

A story this week in the Wall Street Journal highlighted how small businesses and communities are “feeling the pinch” given current market conditions:

This year, good times at Producers Supply Co. came to a screeching halt. Since January, the company’s monthly sales have declined by more than half, as the number of drilling rigs operating in the Marcellus Shale has plummeted to 38 from 131 at the end of last year. … The economic pain from lower oil and gas prices is spreading to small towns and businesses across Pa. … Now, companies that cater to drillers, as well as hotels, restaurants and even farmers, are feeling the pinch.

Shale-gas drilling has reshaped places like Greene Co. in southwestern Pa., historically one of the poorest counties in the state. In June, the county received $4.5 million from a fee that gas companies paid last year on wells that had been fracked. The county had 873 wells producing shale gas last year, the fifth-highest number in the state. Through Tuesday, 77 shale-gas wells had been drilled in Greene Co., down 50% from the 154 drilled in the year-earlier period.

“We’re in survival mode,” Chris Ramsey, of KSW Oilfield Rental LLC, said. … The company, which supplies pumps and vacuums to suck up mud and cuttings from drill sites, has reduced its staff to 14 from 20 last year. … monthly sales revenue is down 45% to 50%.

The downturn is hitting landowners too. Homer Harden, who owns a 100-acre farm 18 miles east of Waynesburg, said his monthly royalty checks from two wells on his land have fallen 80% in recent months.

Despite this well-documented “pinch,” Gov. Wolf recently said “the industry is showing no signs of slowing down.” As he – and the administration – move forward with plans to increase Pennsylvania’s energy tax rate to the highest-in-the-nation, they remain disconnected from market realities and the negative impact even higher energy taxes would have on job creation, capital investments, and consumers across the Commonwealth.

Now, more than ever, as elected officials in Harrisburg continue budget negotiations, it’s vital to join the thousands of voices– from union members to small businesses to consumers – in telling Harrisburg to reject this massive energy tax increase that jeopardizes jobs and threatens shale’s benefits. Become a United Shale Advocate today to let your voice be heard.