Energy Tax Increases Threaten Pa.’s Economic Opportunity

Natural gas development in Pennsylvania supports more than 320,000 jobs and contributes more than $45 billion to the Commonwealth’s economy, a new PricewaterhouseCoopers study confirms. The report, conducted on behalf of the American Petroleum Institute, also found that energy development supports good-paying jobs, with nearly $23 billion in wages provided to hard-working Pennsylvanians.

This latest study detailing the local economic benefits of energy development comes on the heels of numerous reports highlighting the consumer, manufacturing and national security progress tied to safe, responsible Pennsylvania natural gas development. From a rebirth of manufacturing – that’s generating union jobs with family-supporting wages and benefits – to the significant consumer savings resulting from increased domestic energy production, Pennsylvania’s leadership in energy development continues to deliver.

  • Beaver Co. Ethane Cracker Creating Good, Local Jobs: An anticipated shortage of local welders to help build a multibillion-dollar ethane cracker plant in Beaver County has led the Steamfitters Local 449 to step up recruitment efforts for apprentices. … “We will be putting hundreds of skilled tradespeople to work in good jobs with competitive pay and benefits and we will make sure they have the training and support they need to succeed in our profession,” [the union’s business manager Ken] Broadbent said. Shell has said the Beaver County plant will create 6,000 construction jobs and 600 permanent jobs when it is expected to open in the early 2020s. Broadbent said an estimated 450 welders will be needed for the project. (Tribune-Review, 8/2/17)
  • More than 150 people gathered in an elementary school gymnasium in Beaver listened as former Steeler Tunch Ilkin, talking over a background of music, said, “I’m so excited for our region’s future.” While Shell has just begun pouring concrete at the Potter Township site, by the next decade the plant’s seven furnaces will heat liquid ethane — from the Marcellus Shale — to 1,500 degrees Fahrenheit to produce 1.6 million tons of polyethylene a year. … “[Shell’s] working with the community, just like the old companies that used to be here did,” said [Jerry] Rosenberger, a retired steamfitter, praising Westinghouse and Jones and Laughlin Steel. “They took a junk yard and fixed it up and are creating more jobs.” (Post-Gazette, 8/1/17)
  • Natural Gas Production Strengthens U.S. Security, Dominance: Thanks to new technology, the United States has experienced a boom in natural gas production and is set to become the world’s third-largest exporter of liquefied natural gas (LNG) by 2020. The United States has recognized this opportunity and is increasingly taking a leadership role within global gas markets to challenge Russian gas dominance over Europe. … Lithuania built a floating LNG terminal, enabling it to find other suppliers of natural gas, and in 2017, signed an agreement to receive LNG from the United States. … These opportunities and others stemming from the US shale boom and EU’s own energy strategy, driven by goals of diversification, efficiency, and renewables, will provide European countries with more attractive energy partners than Russia. (Atlantic Council, 8/1/17)
  • Prior to Shale Development, Pa. was a Net Importer of Natural Gas: Pennsylvania’s growth in natural gas production has made it a major net exporter of energy in recent years. The state’s marketed natural gas production grew from 573 billion cubic feet in 2010 to 5,264 billion cubic feet in 2016 as a result of the development of resources in the Marcellus and Utica shales. … Prior to the advent of shale gas production, Pennsylvania was a net importer of natural gas. (EIA, 7/31/17)
  • Natural Gas Provides Affordable, Reliable Electricity to More Consumers: Natural gas is on pace to either equal or exceed coal as a source of electricity for the second year in a row, the U.S. Energy Information Administration said Thursday. … The federal government report comes at a time of growth in the number of gas-fired power plants in Western Pennsylvania and Eastern Ohio. The 925-megawatt Tenaska Westmoreland Generating Station in South Huntingdon Township will supply power for up to 925,000 homes once it comes online in late 2018. (Tribune-Review, 7/27/17)

Still, lawmakers continue weighing higher and additional energy taxes that would erode Pennsylvania’s competitiveness, jeopardize jobs, and significantly increase consumer costs. As MSC’s Dave Spigelmyer said immediately following the Senate’s vote to raise taxes, “we’re deeply concerned these new and even higher energy taxes will cost family-sustaining Pa. jobs.”

This proposal – which creates new and even higher energy taxes for consumers and energy producers alike in addition to the impact tax that’s generated $1.2 billion in revenue – will erode the Commonwealth’s competitive advantage that can revitalize our manufacturing base and spur other critical downstream opportunities.”

In fact, a wave of Pennsylvanians, from labor and business leaders to elected officials, continues to raise concerns about the threat of even higher energy taxes.

  • Pennsylvania’s unpredictable tax and regulatory climate, however, serves as a barrier to opportunities. Many consumers and businesses that support the use of natural gas, including those who benefit from the impact tax revenues, realize that government hinders the commonwealth from realizing its potential. … If Pennsylvania wants to become more competitive for investments capital, we must stop playing politics when it comes to the natural gas industry.” – Pennsylvania Chamber of Business and Industry CEO Gene Barr and Dennis Martire, Vice President and Mid-Atlantic Regional Manager of the Laborers’ International Union of North America (Beaver Co. Times-Tribune column, 8/3/17)
  • My constituents always look at me and say, ‘if you’re gonna tax, at the end of the day, I’m probably gonna have to figure out how to cut in my budget, so why can’t you at the state figure out how to cut in yours?’,” – Pa. Rep. Kate Klunk (ABC 27, 8/1/17)
  • The truth is that all Pennsylvanians are benefiting from the abundance of natural gas being produced through lower energy bills. All Pennsylvanians reap the benefits from gas development through the use of an impact tax. This tax has generated $1.2 billion in new revenue since 2011 and all 67 counties benefit regardless of drilling activity. This is a funding source for local roads, bridges, parks and first responders. It also boosts funding for statewide environmental programs. … Pennsylvania’s natural gas impact tax is definitely a policy solution that is working as designed. We do not need a severance tax.” – Barry Walters, resident of Bethlehem, Pa. (Morning Call, 7/31/17)
  • As I have previously written, the notion that the natural gas industry doesn’t pay its fair share of taxes is a fallacy. In addition to the business taxes that every other industry pays, the natural gas industry is also subject to an impact tax – the revenues of which go to local governments and have helped to keep this vital industry in the Commonwealth competitive. … The PA Chamber is leading a coalition of diverse organizations against severance tax efforts because it will have a negative impact on the Commonwealth’s economy and competitive edge.” – Gene Barr, President and CEO of the Pennsylvania Chamber of Business and Industry (The Sentinel column, 7/28/17
  • These tax increases will hit almost every individual and family in Pennsylvania. Too many families are already struggling to meet their own financial obligations. Demanding that they pay even higher taxes for basic necessities like electricity and heat will only make those problems worse. The additional severance tax has the potential to devastate the natural gas industry in Southwestern Pennsylvania. We should be doing everything in our power to encourage companies to come here, stay here and create family-sustaining jobs.” – Pa. Sen. Camera Bartolotta (Observer-Reporter, 7/27/17)

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