Below is the full text of my letter to the editor of the Philadelphia Inquirer, who has a irrepressible need to “edit” the key points of everything I submit. I’m sending you the full version, because I know you’d be otherwise unable to sleep tonight…
To the Editors:
Last Sunday’s Inquirer contained an editorial by Lt. Governor Jim Cawley that argued against taxing Marcellus Shale extraction in Pennsylvania. As a strong proponent of imposing such a tax, I would like to point out some flaws in Mr. Cawley’s argument
Mr. Cawley argues that imposing any extraction tax would “deter” drilling in Pennsylvania and compel the industry to “leave” Pennsylvania. He cites Alberta, Canada as an example of a place that imposed a tax causing drilling there to be put “on hold.” With all due respect, none of this is true.
First, even in Alberta, things are not as Mr. Cawley portrays them. The Duvernay Shale deposit there is in the embryonic exploratory stage. There are no active commercial wells, although energy companies have been spending billions on land for years, uninterrupted. Mr. Cawleys assertion that companies in Alberta put shale development “on hold” is simply not true. It never happened
That said, it is odd that Mr. Cawley goes to a different country to find support for his position. There are 33 states in this country with active shale deposits. 31 of them impose a tax. I suspect that the reason Mr. Cawley felt compelled to look abroad is because every single state in this country with a tax also has a booming shale industry.
In fact, the states with the most natural gas production have among the highest tax rates, with Texas, Oklahoma and Wyoming imposing a tax averaging over 7% of the value of gas produced. Conservative Governors Sarah Palin and Rick Perry both signed an extraction tax bill for their states. There is very little support for Mr. Cawley’s position anywhere on the ideological spectrum.
The reality is that the shale industry is not going anywhere. There are billions of dollars to be made on natural gas that the drillers can only get in Pennsylvania. Further, there is nowhere for them to go, since virtually every other state with a deposit already imposes a tax. We have many things to worry about in Pennsylvania. The drilling industry leaving our state before every bit of natural gas has been extracted is not one of them.
Mr. Cawley argues that ANY tax would be “punitive” (although how is never explained) and that “taxes deter business and job growth.” That is not an argument against taxing Marcellus Shale. That is an argument against taxing anything, ever. Refusing to charge out-of-state companies to take our resources out of our ground isn’t about keeping an industry here. This is about the Corbett administration’s theological objection to taxes in general, regardless of Pennsylvania’s educational, environmental or infrastructure needs.
Senator Daylin Leach