PA. Gas Production Doubled, but PA.'s Impact Fee Revenues Fell; Fees Not Tied to Production Amts.

[JPZenger]

http://www.philly.com/philly/business/homepage/20130511_ap_aspagasproductionsoarsexpertsdebatetaxes.html

AP Article

Almost all states that have a large natural gas industry (including Corbett's beloved model state of Texas) have an extraction tax. One was proposed in PA. for many years by Democrats in the legislature. After years of delay and public pressure, the Legislature a couple years ago passed something, but it was not an extraction tax. Instead, it was an impact fee. The word fee was used instead of tax to make Grover Norquest happy.

However, there was one very slight detail, the impact fee revenues DON'T INCREASE when production increases.

Excerpt:

"A boom in natural gas drilling in Pennsylvania is generating billions of dollars for companies and private landowners, but some experts question whether the state's low effective tax on the bounty makes long-term sense. Unlike most leading oil and gas producing states, Pennsylvania doesn't link fees to how much gas comes out of the well. Instead, each well pays an impact fee no matter how much it produces. That means that even as Marcellus Shale gas production has soared, revenue to local and state government isn't keeping pace.

For example, the impact fee generated about $204 million in 2011, when production was about 1 trillion cubic feet of gas. But when production doubled in 2012 to just over 2 trillion cubic feet, the impact fee revenue dropped to about $199 million. One billion cubic feet of gas equals about 180,000 barrels of oil.

"That gap is going to get bigger and bigger" over time, said Michael Wood, a research director with the Pennsylvania Budget and Policy Center, a progressive research group based in Harrisburg. Over 20 or 30 years, that means the current impact fee here may generate $10 billion or $15 billion less than a flat tax on production, Wood said."

[Curmudgeoness]

1. The state is run by brainiacs.

I will never understand why PA always has to try to reinvent the wheel instead of making it easy and seeing what works elsewhere. There are always harebrained ideas, that are unproven and make no sense to anyone who stops and thinks about the pros and cons.

This is just another example of not thinking it through. Or maybe it was thought through----by Corbett, who wanted to have his administration look good by benefitting from money from wells drilled, but who could not give a shit about the future of PA. This is the only explanation I can come up with.

[JPZenger]

2. Oh, it was definitely thought through - by the frackers who wrote the law

[enough]

3. Right. (nt)