MSC in Pittsburgh Post-Gazette: Severance Tax Ignores Shale Gas Market Realities

A recent column (“Pennsylvania Needs and Can Afford a Shale Gas Severance Tax,” Jan. 18 Forum) offers a false narrative about basic economic realities associated with new energy taxes, capital investment and continued job growth.

These academics, who have collaborated with advocacy groups for new taxes on job creators, ignore the fact that shale development is incredibly capital-intensive.

The recent market conditions have already led many energy companies to slash spending as well as jobs. In fact, a new Wood Mackenzie report projects an onshore U.S. rig decline of 30 percent as well as a 40 percent reduction in overall industry spending from 2014 levels.

To suggest that new energy taxes “would actually increase the size of the ‘golden egg’ benefiting Pennsylvanians” is detached from reality. Let’s be clear: New energy taxes — which support thousands of good-paying jobs, many across our region’s building trades — would deter investment and jeopardize jobs as well as the broad-based benefits tied to shale.

Top labor union leaders agree. Sean McGarvey, president of North America’s Building Trades Unions — representing 3 million skilled craft professionals — has urged Pennsylvania lawmakers “to make sure that they don’t kill this industry before it has the chance to make the largest impact,” adding: “I wouldn’t want to be on the wrong side of history.”

A college campus can provide an appreciation of how (and in some cases what) to think. However, in the real economy, policies — including those related to new energy taxes — impact business decisions, capital allocation, investment direction and job growth as well as overall government revenues, especially in a turbulent commodity market.

Common-sense policies that encourage investment in Pennsylvania will be crucial to maximizing shale’s shared benefits — more jobs, lower consumer energy costs, cleaner air and a regional manufacturing rebirth that could pay dividends for generations.

Marcellus Shale Coalition
North Fayette

NOTE: Click HERE to view this letter online.