Energy: Shale Game

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story by Lee StabertDue to legislative gridlock, the state has failed to enact a severance tax on drilling in the Marcellus Shale. Governor Rendell has argued that the failure to pass a tax will harm the environment, make it harder for local governments to deal with the impact of drilling and exacerbate the state government’s financial strife. Now, as Republicans seize control of the governor’s office as well as both houses of state government, the odds of getting a judicious tax passed have grown worse.

A severance tax is a tax imposed by a state on the extraction of natural resources—such as natural gas—that will be used in other states. According to PennFuture, the proposed tax (based on legislation that’s been on the books in West Virginia for over 20 years) would have generated more than $100 million a year, with that figure increasing to more than $630 million annually by 2014.

For many environmentalists, any drilling in the shale is unacceptable, but it’s happening, and with no financial safety net in case of incident. In a cash-strapped state like Pennsylvania that’s been forced to cut educational and environmental programs, this money could have a tremendous impact. 96 percent of natural gas is produced in states that have severance taxes, but that hasn’t stopped PA legislators from fighting its passage.

In response to the stalemate, Rendell signed an executive order issuing a moratorium on leasing of state forest land for natural gas drilling. Unfortunately, with the November 2 election results in—and with them, a new Republican governor—that stipulation can quickly be reversed.

“We hope the new governor [Attorney General Tom Corbett] changes his mind about the need to enact a severance tax on natural gas drilling,” says Christine Knapp of PennFuture. “The state needs the revenue to ensure that it has the ability to adequately oversee the industry, enforce environmental laws and repair the damage that drilling causes to our land, water and communities. He needs to understand that if we don’t pass a severance tax, the costs of the damage will be paid by taxpayers.”