OPED: Natural gas industry: two truths and a lie
Clark Ruppert Jr., a member of the Pennsylvania State Council of Machinists from West Manchester Township, supports Auditor General Eugene DePasquale's calls for a natural gas extraction tax in the 2017-18 budget. Jason Addy
Ice-breaker games can range from creative to downright painful. Perhaps one of the most popular — and enjoyable — is the classic “Two Truths and a Lie.” In it, participants share two truths and one lie about themselves, and others try to guess the false statement.
The game can make for a lot of laughs in an environment where, typically, little is at stake. Unfortunately, when it comes to messages from politicians, lies have far worse consequences.
For example, of the following three statements, which is false?
- Pennsylvania’s natural gas tax has generated $1.2 billion dollars in new revenue since 2011, including $173 million in 2016 alone.
- The oil and natural gas industry provided 322,600 jobs in Pennsylvania in 2015, with income from the industry topping $22.9 billion.
- Pennsylvania is the only major natural gas-producing state that doesn’t ask drillers to pay their fair share.
If you listen to Gov. Tom Wolf and his legislative allies on the issue, you would think they are playing "Two Lies and a Truth," where the first two statements are false and the last is true. They seldom talk about the former and loudly argue the latter — in a very disingenuous game of misleading the voters.
The reality is that since 2011, Pennsylvania’s natural gas tax — called an impact fee —has, indeed, generated more than $1 billion in tax revenue. This is above and beyond the hundreds of millions of dollars gas drillers pay in the same taxes paid by every other business in the commonwealth, such as income taxes and sales and use taxes.
State government’s bottom line isn’t the only beneficiary of the natural gas industry. Communities across Pennsylvania have seen infrastructure and other government services investments, thanks to the additional taxes drillers pay.
What’s more, the natural gas industry provides more than 4 percent of the state’s total jobs and more than 5 percent of the state’s total income. And 2.7 million Pennsylvania homeowners rely on natural gas to heat their homes.
That’s why it’s disturbing, to say the least, when Gov. Wolf and Harrisburg politicians take aim at Pennsylvania’s energy revolution with false claims that the state’s gas drillers are somehow getting a pass or special treatment when it comes to paying taxes.
Far from it.
The truth is Pennsylvania gas drillers pay a greater diversity of taxes than many drillers elsewhere in the country. In fact, in addition to the impact fee, drillers in the commonwealth pay taxes that don’t even exist in many of the other gas-producing states that Wolf and his special-interest allies seemingly idolize.
Texas and Wyoming, for example, have neither a corporate nor a personal income tax. Only four of the top 10 gas-producing states have death taxes. Pennsylvania has all three, with our corporate income tax being the second-highest in the nation.
Additionally, California, also an energy-producing state, does not impose a severance tax on oil and natural gas production.
Gov. Wolf touts “fairness” as his reason for pushing yet another tax on gas drillers, but true “fairness” as compared with other states would mean cutting or eliminating corporate taxes and personal income taxes — a fact conveniently missing from the political rhetoric calling for additional natural gas taxes.
Of course, some claim that despite all the taxes drillers pay, they can afford more.
Matt Brewer of Hydroedge Solutions, a Washington County oil and gas service company, would disagree. Testifying at an Aug.15 legislative hearing last year, Brewer noted that while he planned to add dozens more workers to his current team of 85 and make up to $3 million in capital investments, Pennsylvania’s unfriendly business climate may force him to move his business to Ohio, where the business climate is more hospitable.
Similarly, Mark Caskey of Steel Nation, headquartered near Pittsburgh, testified at the same hearing that the tax and regulatory uncertainty in Pennsylvania had already forced him to cancel one project and delay others.
Beyond this, yet another tax on the industry would mean millions of Pennsylvania homeowners using natural gas would see higher home-heating bills. In this winter’s record-breaking cold, such an increase would have been particularly acute.
If fairness is the goal, then it’s time to be fair to the people of Pennsylvania who deserve to know the truth about our natural gas industry’s contributions to the state — in jobs, services and, yes, revenue.
Because unlike ice-breaking activities, when it comes to policies that impact workers, job creators and millions of Pennsylvania homeowners, spreading lies is no game.