Our Opinion: Gas industry is healthier, but be careful
It’s not the boom of seven or eight years ago.
But the natural gas industry is on the upswing in Pennsylvania.
The drill rig count across the state has risen by 33 percent between December 2015 and December 2017.
At last count, 40 rigs were in operation in Pennsylvania.
As good as those numbers are, Pennsylvania is not a leader of the pack in terms of natural gas industry health.
New Mexico has increased its rig count by 97 percent in the past two years and Ohio has increased it by 93 percent.
And Pennsylvania has an infrastructure weakness that it must overcome if it is to remain in the forefront of the natural gas industry.
“Not all the gas is getting to market,” Stephanie Wissman, executive director of the American Petroleum Institute of Pennsylvania, acknowledges. “Additional pipeline infrastructure is needed.”
That infrastructure will pay off for consumers and the industry in the future, but it takes bigtime capital and years to make it happen.
Which is part of the reason why Wissman considers the latest push for a natural gas severance tax bad for Pennsylvania.
The natural gas producers already pay an impact fee, which has generated $1.5 billion in tax revenues, much of which have been sent to municipalities in the drilling footprint.
The industry pays business taxes, just like other businesses. And it employs or supports 320,000 workers, all of whom pay income taxes to the state.
And it is easy to forget that, unlike many industries, the natural gas industry did not seek or receive any state funding support to come to Pennsylvania.
We understand the easy strategy of seeking a second tax on an industry that is doing well and turning a profit in Pennsylvania. But it is a competitive industry and natural gas is available in a number of states.
A severance tax is worth discussing, but if it jeopardizes the continued presence of an industry that is already generating revenue for the state and its workers, it’s not worth it.
State leaders representing both parties need to be very careful in considering whether to have a severance tax and, if so, how large it should be.