As a resident of Pennsylvania, I have seen firsthand the benefits of the natural gas industry in our state. Marcellus Shale resources have brought about an affordable, clean burning source of energy that can be accessed here at home and exported abroad – offering extraordinary economic opportunity, creating jobs and setting our state apart as a world-class energy hub.
But this promising future could be disrupted if another punitive tax is placed on the industry. If it were enacted, your proposal to place a severance tax of 6.5 percent on natural gas drilling companies would make it the highest severance tax rate among our bordering states. At the same time, elected leaders in West Virginia and Ohio are working to freeze or even eliminate natural gas severance taxes because they realize doing so will make their states more competitive. They also realize that the industry is experiencing its own set of market challenges. Here in Pennsylvania, the low cost of gas has led to an 83 percent drop in rig count activity over 2012 levels. There has also been less hiring, and even job cuts. What do you think another tax will do, besides put additional financial strain on natural gas companies?
You say that the industry needs to pay its "fair share." But the impact tax alone has collected $1 billion, critical funding that is distributed to every one of Pennsylvania's 67 counties. This is money that local governments have come to rely on to help pay for projects like road and bridge construction. Changing this tax structure which has worked to attract companies to our state is misguided, especially in a slow growth economy with unfavorable market conditions.
I urge you to consider these facts as you debate whether to impose another natural gas tax. Pennsylvania has the good fortune of resources that can solidify our reputation as an energy leader and build a better future. As a business leader, you should realize that we need to invest in the infrastructure that will get the natural gas to market – not chase these companies into other shale-rich states that will offer them the environment they need to expand and hire.