By David Spigelmyer
With better-than-expected tax revenue collections and more than six million Pennsylvanians employed in the workforce – an all-time high – the Commonwealth’s economic outlook is increasingly bright.
Fewer Pennsylvanians are looking for work than at any time since August 2000. The Commonwealth’s unemployment rate is currently the lowest since 1976. Tax collections are nearly 3 percent higher than anticipated, with about $1 billion more in revenue generated than expected, a major factor in securing a state budget void of new tax increases.
These are incredible indicators of a strong, growing economy. A key driver of this shared economic growth is the development of our region’s world-class energy resources. Shale development continues to create family-supporting jobs, generate hundreds of millions of dollars in annual tax revenue, and attract investment in our manufacturing sector.
Pennsylvania’s oil and natural gas industry supports more than 300,000 direct and indirect jobs and contributes $45 billion to the Commonwealth’s economy, according to a PricewaterhouseCoopers analysis.
As the Public Utility Commission (PUC) announced recently, Pennsylvania’s tax on natural gas development, the impact tax, generated $252 million last year, bringing the eight-year total to nearly $1.7 billion in new revenue. This effective tax – which is levied on top of all other Pennsylvania business taxes – provides revenue to county and local governments in all sixty-seven counties, benefitting roads, bridges, emergency preparedness, environmental protection, green space and parks development, rails to trails, social services, and tax reductions, to name a few.
While job growth and the associated increase in tax revenue are signs of a vibrant economy, consumers are the direct beneficiaries of the increase in domestic energy production. Based on PUC data, Pennsylvania households are realizing an annual average energy savings of $1,100 – $2,200. Increasing Pennsylvanians’ disposable income gives the broader economy a boost, as consumers can inject additional dollars into the economy.
Likewise, expanding shale gas development bolsters other industries, particularly those that are energy intensive. Ready access to affordable natural gas has lowered costs for manufacturers, spurring a manufacturing jobs revival.
From Pittsburgh to Philadelphia, we are seeing new job opportunities, growth and investment in a sector that’s the backbone of our economy. Significant projects currently are underway thanks to the abundance of affordable natural gas and natural gas liquids, including the construction of the Shell Petrochemicals Complex in Beaver County and the $200 million expansion of the Marcus Hook Industrial Complex in Delaware County, to name a few.
We already are witnessing the extraordinary modernization of our power generation sector, as $13 billion will be invested in Pennsylvania by 2021 for the construction or retrofitting of clean, efficient combined-cycle natural gas power plants.
By developing sound, strategic policies, Pennsylvania has an unprecedented opportunity to leverage its shale-enabled energy advantage to add $60 billion in economic growth, more than 100,000 jobs and billions in state tax revenue, according to the McKinsey & Company “Forge the Future” study.
We truly have a generational opportunity to realize shale’s shared economic and environmental gains, but local, state and federal policies matter. The commonwealth’s competition is not just Ohio, West Virginia, or even Texas – we are competing globally for the capital investment needed to create jobs and expand our economy.
Pennsylvania is moving in the right direction, with all of us benefiting from the rising tide of economic growth. We are proud that our energy sector is a major factor to this success and look forward to capitalizing on the state’s energy advantage by working collaboratively to encourage new investment opportunities in natural gas exports, advanced manufacturing and petrochemicals.
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