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PIOGA statement on proposals by legislators and candidates that will impact “unprecedented” energy production in Pennsylvania

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Posted: September 4, 2014 8:14 pm



Pennsylvania Independent Oil & Gas Association President and Executive Director Louis D. D’Amico today issued the following statement regarding continued efforts by state policy makers to thwart energy development in the Commonwealth:

 “Political leaders from gubernatorial candidate Tom Wolf and state row officers, as well as some members of the General Assembly from both parties, have announced a range of punitive and misguided initiatives on energy producers in Pennsylvania that have the potential to dismantle the unprecedented growth of natural gas production in the Commonwealth. From severance tax proposals of between five and 10 percent to legislation to retroactively impose a $3 million per well “fee” for every well that has been drilled on state forest land, it appears that some elected officials want to scrap the effective policies and regulations that have allowed Pennsylvania to become the second largest natural gas producer in the United States in five short years. The fact is that our industry is investing billions of dollars of private capital and leading the Commonwealth’s economic resurgence, benefiting manufacturers, local governments and consumers.

 “The calls for a severance tax ignore the huge infusion of revenue being paid by natural gas producers and service companies to the state’s tax base. Pennsylvania’s natural gas industry is paying more than its fair share of taxes, including an estimated $2 billion in state and local taxes since 2007 and more than $630 million in impact fees in just the past three years, with much of that money being directed to rural communities that have long been neglected by Harrisburg lawmakers. The fact is that if any other sector of our economy was moving into the Commonwealth with that level of investment and accompanying tax payments, policy makers would be throwing incentives and tax holidays at their feet, not looking for new ways to tax them in new ways or at a higher rate than every other business in the Commonwealth. Our industry does not demand incentives such as tax-increment financing, and relies solely on private capital to make energy development a reality.

“There are multiple shale plays around this country competing for capital with better tax climates than Pennsylvania, home of nation’s highest corporate net income tax. These misguided proposals will result in fewer companies coming into Pennsylvania to drill wells, and more companies looking to reduce their level of investment here.

“Producers in Pennsylvania are already struggling with complicated and changing state regulations that increase the cost to operate, and lower commodity prices due to a lack of pipeline infrastructure to get natural gas to market. A number of producers have cut back their drilling operations due to these substantial disadvantages, and these anti-industry measures would be another strike against our state’s ability to remain competitive.

“The argument often made is that the state needs money and the drilling companies can afford to pay more to help the state out of its financial problems, but the public policy question that must be asked is whether it is better for Pennsylvania’s long-term future to generate tax revenues through economic growth (new job creation, new investment, sales tax, and the local impact fee) or to make it more difficult for the natural gas industry – the industry that has played a key role in Pennsylvania’s economic turnaround – to grow and mature. We, and the 200,000 employees who work in or work with the natural gas industry, believe the choice is clear: Pennsylvania must continue to expand and become a world leader in energy development.”

Visit our information page, Severance Tax Myths vs. Facts.

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