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By Michael Wood, Third and State

The state's Department of Environmental Production (DEP) recently published a biannual report on Marcellus Shale production in Pennsylvania. (Most states require monthly reporting, but that is a different story.) In the data, we can now see how much the state has really given away by refusing to put a robust gas extraction tax in place — and the sum is staggering.

From July 2009 to June 2012, over $8 billion worth of natural gas was extracted from Pennsylvania’s share of the Marcellus Shale. The Commonwealth would have collected more than $500 million had we had West Virginia's natural gas tax in place. Instead, we got $0.

The recent DEP report was incomplete, as the Associated Press highlighted. Production from Chesapeake Energy (likely the state's largest gas producer) wasn't included nor disclosed as being missing in the initial release. Add in the production from Chesapeake over the last six months, and the lost tax revenue figure would be even bigger.

You may remember the Pennsylvania Budget and Policy Center's "drilling tax ticker," which tallied up the lost revenue to the state from not having a meaningful drilling tax in place. Those figures were based on conservative estimates of per-well Marcellus Shale production. We now have real production data (well, all drillers but Chesapeake) to analyze â€” giving us more accurate estimates.

Gas producers will pay an annual drilling impact fee beginning September 1, 2012, but the proceeds from the fee are expected to be lower than a modest drilling tax would bring in â€” even at today's low natural gas prices.
Click to enlarge

How could this foregone $500 million over the last three years been used?

  • Rehire 3,000 teachers;
  • Save General Assistance for 68,000 needy Pennsylvanians;
  • Restore funding for parks and environmental protection; or
  • Help the state meet growing pension obligations.

Pennsylvania continues to lose out on this one-time resource and may possibly be turning our natural bounty into a resource curse. These new data give us an idea of how much we are giving away.

Originally posted to ThirdandState on Thu Aug 23, 2012 at 08:34 AM PDT.

Also republished by DKos Pennsylvania.

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Comment Preferences

  •  this is a damn shame. (4+ / 0-)

    remember when Alaskans created the Alaska Public Fund from the revenues of their resource extraction industry?

    coulda done that for PA too.

    (Or left it in the ground. I like that option as well.)

    pseudoscience can kill

    by terrypinder on Thu Aug 23, 2012 at 08:42:12 AM PDT

  •  Not to mention the cost to tourism (1+ / 0-)
    Recommended by:
    Glacial Erratic

    Hikers in north central PA have come upon trails detoured around gas well sites on some of the most scenic ridges. Truly a loss.

    Regarding the extraction or severance tax, I figure Corbett will draw things out long enough so that the gas companies end up paying far less than they would if we had a tax, since gas supplies will dwindle in time. What a loss to the Commonwealth.

    Speaking of Commonwealth, such royalties should go to all PA residents, since we all are affected by the drilling. Hah!

    Drilling in state parks? Why can't we declare eminent domain over parkland to preserve it? Why is private property sacrosanct when it's leased for drilling, but up for grabs (pipelines, etc.) when it's not leased?

    /rant

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