Pa. Chamber joins with stakeholders to highlight benefits of shale development on economy

The Pennsylvania Chamber of Business and Industry joined with more than 20 organizations at the state capital on Tuesday to send a message to members of the General Assembly and the governor that higher energy taxes will hinder economic growth and put good paying jobs at risk.

The chamber, along with representatives from manufacturing, small business and education, sought to highlight the economic and job creation benefits of responsible shale gas development.

“Shale development has jumpstarted Pennsylvania’s economy – creating thousands of direct and indirect jobs,” said Pa. Chamber President and CEO Gene Barr. “Employers from all regions of the state across various industry sectors have seen their businesses grow directly because of the natural gas industry. But higher energy taxes will stunt our commonwealth’s economic growth and jeopardize the success of our state’s fastest growing industry,” he added.

Pennsylvania Gov.. Tom Wolf’s proposed 5 percent severance tax on Marcellus Shale region drillers has drawn the ire of some lawmakers, including House Speaker Mike Turzai, R-Allegheny, state Sen. Gene Yaw, R-Bradford, and Rep. Matt Baker, R-Tioga. Turzai has called the tax “a job killer.”

As of 2014, more than 243,000 Pennsylvanians have been employed as a result of the natural gas industry, according to the chamber. Average core industry salary stands at $93,000 per year.

Additionally, the natural gas industry has helped to generate more than $2 billion in tax revenues for the state. This is on top of the more than $850 million that has been collected under the current impact tax, which, according to the Independent Fiscal Office, is equivalent to a 4.7 percent severance tax and is benefitting local communities across all 67 Pennsylvania counties.

Dawood Engineering Inc. President Bony Dawood said, “For companies like Dawood, enacting a punitive tax on natural gas will have a negative impact on our ability to do business.” Dawood is located in Enola, Pa.

Despite the economic gains resulting from responsible shale gas development, some Harrisburg policymakers are proposing even higher energy taxes that threaten to drive natural gas drillers to other states in the shale play. According to a recent report by the state’s Independent Fiscal Office, the Wolf administration’s energy tax proposal would levy the highest-in-the-nation effective rate on the industry.

A recent Natural Resource Economics, Inc. study found an additional tax on the natural gas industry could result in the loss of 6,000 direct and indirect jobs in 2016 alone. That figure grows to 18,000 by 2025.

The study also found that a severance tax would reduce the number of wells drilled by more than 1,000, leading to a cumulative loss of more than $20 billion to Pennsylvania’s economy between 2016 and 2025.

“The natural gas industry is key to the U.S. finally achieving energy security,” said retired U.S. Army Capt. Tony Caldarelli. “The development of the Marcellus Shale play accounts for almost 40 percent of the nation’s natural gas production. To impede its development at this critical time will put America’s energy independence and national security and at risk, and this would put our service men and women at risk, again.”

Publication: Keystone Business News