What They’re Saying: “Couldn’t Be a Worse Time for Higher Energy Taxes”

Despite many Pennsylvanians’ concerns about the grave job and consumer consequences of a massive energy tax hike, some in Harrisburg continue to dangerously ignore stark market realities in their focus on enacting even higher energy taxes.

Yet key energy-producing states, including W.Va., that rely on severance tax revenues are facing severe budget shortfalls as difficult market conditions continue to challenge the energy industry, according to the federal Energy Information Administration. And as the Pittsburgh Tribune-Review reports this week, the energy slowdown is even “beginning to be felt in the [regional] housing market.”

Weighing-in on these painful economic factors, MSC president Dave Spigelmyer told the Beaver Co. Times this week that “Pennsylvanians are looking to their elected officials to enact common-sense policies which create new investment and job opportunities, not higher energy taxes or costly regulations which stand in the way of growth for an industry that has been a bright spot for the commonwealth.

Here’s what they’re saying:

Higher Energy Taxes Threaten Jobs, Economic Growth

  • EIA: “State Severance Tax Revenues Decline”: Several states that collect significant revenue from severance taxes on fossil fuel extraction are re-evaluating current and upcoming operating budgets and taxation structures to address revenue shortfalls. … Lower fossil fuel prices, and in some cases, lower production, have led to lower severance tax receipts than were expected when revenue estimates were developed. … W.Va.: Severance taxes accounted for 13% of W.Va.’s tax revenues in 2014. Falling coal production and low natural gas prices in the third quarter of 2015 resulted in the lowest total tax collection since 2008, mostly as a result of decreased severance tax receipts, helping create a projected fiscal year 2016 budget deficit of more than $250 million. (EIA, 1/12/16)
  • “Time Isn’t Right” For Even Higher Energy Taxes that “Hamper” Growth: According to oilfield services company Baker Hughes, there are only 37 active rigs in all of the Marcellus shale region compared to 77 at this point last year. … Baker Hughes said there were only 27 active rigs in Pa. at the end of 2015 compared to 53 at the start of 2015. … Dave Spigelmyer, president of the MSC, agreed that “difficult market conditions” continue to “challenge our industry and broader economy” and argued that the time isn’t right for any kind of legislation like a severance tax that could hamper growth or a recovery. “Pennsylvanians are looking to their elected officials to enact common-sense policies which create new investment and job opportunities, not higher energy taxes or costly regulations which stand in the way of growth for an industry that has been a bright spot for the commonwealth,” he said. (Beaver Co. Times, 1/14/16)
  • “There Couldn’t Be a Worse Time for a Massive Energy Tax Increase”: There couldn’t be a worse time for a massive energy tax increase as the industry — largely made up of Pa. small businesses — continues to weather a persistent slowdown. Pennsylvania’s current natural gas impact tax, which has generated more than $850 million since 2012, benefits every county. … Safe, tightly regulated energy development presents tremendous opportunities for the Commonwealth and policy makers must focus on common-sense solutions that encourage natural gas production and use. (CitizensVoice letter, 1/11/16)
  • “Energy Slump Bleeds into Housing Market in Western Pa.”: Foreclosures increased last year in energy-producing regions, including Washington Co., suggesting that the struggles of oil and gas drillers are beginning to be felt in the housing market. Foreclosure filings in Washington Co. jumped 11 percent in 2015, more than any other county in the Pittsburgh metro area, according to data released by RealtyTrac. Energy-rich states such as Texas, Oklahoma and North Dakota also had more foreclosures last year. The trend highlights the impact that the energy industry’s downturn is having on otherwise stable housing markets even as foreclosures decline nationwide, said Daren Blomquist, Realty­Trac’s vice president. … But volatility in oil and gas markets is starting to be felt in the broader regional economy. Natural gas prices have declined about 50 percent over the past year, recently reaching a 16-year low. (Tribune-Review, 1/13/16)

Shale’s Consumer, Manufacturing Savings

  • Thanks to Fracking, Natural Gas Electricity Costs Slashed by 1/3: Electricity prices in America dropped by a third over the last year due to cheap natural gas provided by hydraulic fracturing, or fracking, according to a Monday report by EIA. The EIA report states the cost of electricity dropped by up to 37% in 2015 relative to 2014. … This large drop in the cost of electricity is due to natural gas prices being at their lowest point since 1999 due to fracking. (Daily Caller, 1/11/16)
  • “Pa. Family Farmers, Consumers, Benefit from Our Shale Revolution”: For generations, family farming and responsible oil and gas development have forged a key partnership as the backbone of the Commonwealth’s economy. As we celebrate the Pa. Farm Show’s centennial anniversary this week, that relationship between food, fiber, and fuel couldn’t be stronger, with family farmers, as well as consumers throughout the Commonwealth benefitting from our shale energy revolution. … Chiefly important among shale’s numerous benefits to rural Pa. is its role in preserving open space and strengthening farming communities. In fact, responsible natural gas development has added $130,000 in wealth to the average Pa. farm, according to a recent study. Shale’s direct economic benefits enable farmers to hold on to their land, continuing the long tradition of multi-generational family farming. … In fact, shale development benefits all 63,000 Pa. farming families through lower energy costs, stable fuel prices, and more affordable fertilizers. (PennLive op-ed, 1/12/16)
  • Local Natural Gas Production Strengthens Pa. Economy, National Security: Next month, the first shipment of Marcellus Shale ethane will set sail from Marcus Hook to Norway, launching a new export trade for the Delaware River port that is being hailed as a boost to the gas industry, local maritime interests, and European manufacturing. Sunoco Logistics has committed $2.5 billion to the Mariner East pipeline network to transport ethane and other liquid fuels, such as propane and butane, across Pa. from the Marcellus fields to that Marcus Hook terminal, erected on the site of a former oil refinery. … “The start of ethane shipments on Mariner East 1 represents the next phase of the project and a re-orienting of the Marcellus and Utica resources to benefit Pennsylvanians directly, through local use, while strengthening the state’s economy through access to other markets, both domestic and international,” Sunoco spokesman Jeffrey. Shields said. (Phila. Inquirer, 1/10/16)

Natural Gas Improves Air Quality

  • “Abundant and Clean” Natural Gas Reduces Greenhouse Gas Emissions: Thanks to [the U.S. energy] revolution, powered by horizontal drilling and hydraulic fracturing, natural gas has achieved rock-star status in the U.S. energy panoply. It’s abundant and clean; it’s transportable and very affordable. In fact, we have the cheapest natural gas on earth. Economics and geoscience have conspired to make it a major fuel for the foreseeable future. … We are probably about to become the world’s biggest exporter of liquefied natural gas (LNG) — and we could continue to reduce the carbon dioxide emissions from electrical generation, the largest single source, because a gas-fired power plant is simpler, cheaper, and easier to operate. … In the final analysis, renewable-energy hawks should endorse the star status of natural gas. Wind and solar power fluctuate — the wind doesn’t always blow; the sun doesn’t always shine — and natural gas is far more efficient than any other fuel when it comes to filling in those gaps. In fact, it’s safe to say that…gas — and a lot of it — will be what will keep “renewables” palatable. … A future without more gas for electrical generation — unwisely dictated by the EPA — could be pretty dark and cold. (Real Clear Politics op-ed, 1/12/16)
  • “Fracking is Making America Greener”: Natural gas burns much cleaner, emitting roughly half of those GHGs, and its growing momentum…can only be seen as good green news. But the modern environmental movement is loathe to give any sort of credit to the shale boom, preferring instead to stick to its doom-and-gloom prognostications and moralist chiding. That’s a shame, because America isn’t getting the credit it deserves for greening its economy without donning the eco-hairshirt: … We’ve said it before but it bears repeating (even if it does fall on deaf ears amongst environmentalists): Shale gas is fracking green. (American Interest, 1/8/16)

Learn more about the threat even higher energy taxes pose to shale’s economic and environmental opportunities on the MSC’s blog. And be sure to follow the MSC on Facebook and Twitter for more shale facts.