New Castle News

Closer Look

April 29, 2014

Our Opinion: Levies on shale gas will take center stage this year

NEW CASTLE — While the November general elections are a long way off, we expect proposals for a shale gas tax to become a big part of the political debate.

In some ways, it already is. Democrats running for governor are all calling for an extraction tax as a way to boost spending on education and the environment. And even a few Republicans in the state Legislature have come out in support of such a tax, in part because of a potential hole in the upcoming state budget.

But another reason these Republicans are backing the proposal is that they represent areas in the extreme eastern part of the state outside the Marcellus Shale region. Property owners there are not benefiting directly from the shale, and we presume there is greater support for such a tax in those areas.

Gov. Tom Corbett, of course, has steadfastly opposed any extraction tax for shale gas. It’s part of his expressed rejection of any tax hike in the commonwealth — although the current impact fee on shale gas and the new fees imposed on gasoline sure look like taxes to most Pennsylvanians.

Corbett’s main argument against an extraction tax involves the notion that it would discourage gas production in the Pennsylvania. Critics counter that such taxes in other states haven’t thwarted drillers.

Obviously, the rate of taxation is likely to be one of several factors when it comes to drilling decisions. Undoubtedly, the higher the taxes, the less benefit drillers would see from operations in the commonwealth. But at what rate does a tax actually turn away drillers?

And where is the dividing line between where the commonwealth has a legitimate reason to tax natural gas supplies for the greater good and where such a tax becomes a convenient means for government to grab more cash?

These are matters worthy of consideration and public discussion. And frankly, we’re not sure Pennsylvania has had that debate just yet.

But a gubernatorial election year creates that possibility. Both sides will be able to make their case.

In such a debate, some larger questions should not be lost. In particular, it’s important to recognize the shale gas boom is about more than energy extraction and who makes money.

Environmental and land use concerns come into play. But so does the potential for broader economic development.

The proposed Shell cracker plant in Beaver County is closely tied to gas production in the region. Such a facility would have a tremendous impact on the local jobs scene, not only in terms of employing people but also creating offshoot industries.

In this year’s debate over shale gas taxes, voters have many things to keep in mind.

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