Severence Taxes are Important but Opposed by Industry

by Duane Nichols on June 11, 2019

Severence taxes are needed for local & regional infrastructure, etc.

Pennsylvania governor wants severance tax on natural gas

From an Article by David Beard, Morgantown Dominion Post, June 9, 2019

SOUTHPOINTE, Pa. — West Virginia legislators and lobbyists are vigorously debating raising the severance tax on oil and gas extraction.

Proponents argue that the gas developers make millions and can afford the pay their fair share to maintain the state’s infrastructure and support such things as PEIA. They don’t want a repeat of the old-time coal industry’s take-the-money-and-run behavior.

Opponents argue that neighboring Pennsylvania and Ohio have significantly lower taxes and industry wil simply pick up its rigs and take them across the borders; West Virginia already lags behind both in rig counts and production, despite an abundant supply of gas.

But the severance tax debate isn’t unique to West Virginia. In Pennsylvania, Democrat Gov. Tom Wolf is leading a severance tax-hike movement, termed his Restore Pennsylvania Program. His chief opponent is the Republican-led House of Representatives.

Gas industry leaders learned something about the struggle from Pennsylvania’s Republican Speaker of the House Mike Turzai during a session of the Appalachian Storage Hub Conference at Southpointe.

Pennsylvania has no severance tax now. It has an impact fee that’s generated more than $2 billion, Turzai said. “It has transformed southwestern Pennsylvania.” It’s helped counties grow that haven’t seen population or economic growth for decades.

The proposal passed the Senate once, he said, but died in the House. He doesn’t understand why Wolf is still pushing it. “Why are we talking about this ‘Restore PA.?’ I thought we had put this aside.”

Wolf has brought his plan back under HB 1585 [with some GOP support from the southeast part of the state] and SB 725, both introduced on Wednesday. Wolf’s new “commonsense severance tax” would be volumetric and tiered according to sales price, ranging from 9.1 cents per unit to 15.7 cents,

The revenue would fund the issue of $4.5 billion worth of bonds to pay for various projects: broadband access, flood control, disaster response, storm water and transportation infrastructure, blight restoration and more.

Wolf promoted his plan in a press release: “We have a real opportunity to make impactful infrastructure investments in Pennsylvania. Restore Pennsylvania is the only plan presented that can actually address the needs in every community.

He continued, “We have an opportunity to provide all of our students’ internet access, an opportunity to help our municipalities truly address the crippling effects of blight, an opportunity to help families devastated by flooding when the federal government turns its back on them, and so much more. We need to seize this opportunity for all Pennsylvanians.”

Turzai thinks it’s a bad idea. “My notion is it is completely irresponsible.” For one, it would depend on borrowed money, he said.

And it would be self-defeating because the businesses it taxes to pay the loans would lose incentive to do business in Pennsylvania – an argument similar to the anti-tax-hike arguments in West Virginia.

Also, while he believes in public-private partnerships, he said, he doesn’t see a point in using borrowed money to subsidize broadband providers such as AT&T and Verizon to do what they could afford to do on their own.

Countering Wolf, Turzai had his own Energize PA initiative, consisting of eight bills. They include a tax credit to attract manufacturers using methane to power production; creating 20 Keystone Energy Enhancement Zones where businesses will be eligible for state and local tax exemptions and credits for 10 years; expanding the state’s gas-fuel pipeline program to make low-cost gas energy available to residents, manufacturers and pad-ready industry and business sites; and streamline permitting for brownfield cleanup and environmental permits.

On that last point, Energize PA proposes to put the state Department of Environmental Protection’s permitting process under a separate independent commission. PA-DEP would retain its enforcement powers.

“We think that would actually put law enforcement where it should be,” he said. The new commission would consist of gubernatorial appointees approved by the Senate.


Marcellus Shale Coalition Opposes New Severance Tax

By the Editor, PA Business Central, June 10, 2019

The Marcellus Shale Coalition (MSC), representing the local natural gas development industry, expressed opposition to Governor Tom Wolf’s proposed natural gas severance tax at a recent meeting of representatives from MSC, the Williamsport/Lycoming Chamber of Commerce and other regional leaders. But, Pennsylvania is the only major gas-producing state in the United States that does not have a severance tax in effect.

Governor Wolf’s proposed severance tax on the natural gas industry would fund the Restore PA initiative, which is a plan to address critical infrastructure needs across the state. The plan includes initiatives to mitigate flooding, expand broadband, address blight and build green infrastructure, among other benefits to the state.

MSC President David Spigelmyer said at the meeting, “Governor Wolf’s proposal to triple-tax Pennsylvania’s energy industry will hurt our ability to compete for investment capital, cost Pennsylvania jobs and harm consumers through higher energy costs. We are committed to working with elected officials on solutions to leverage our natural resource abundance for continued job growth, environmental progress and a brighter future for the entire Commonwealth.”

Williamsport/Lycoming Chamber of Commerce president Jason Fink added, “Development of the Marcellus Shale has spurred investment in Lycoming County and the surrounding region, bringing in hundreds of new businesses and generating thousands of good-paying jobs for our residents. The Governor’s proposal to add a tax on top of the existing Impact Tax would stifle the kind of investment interest that has been transformational for Lycoming County.”

{ 3 comments… read them below or add one }

Duane Nichols June 11, 2019 at 10:47 am

Subject: Clear Energy Alliance by DeSmogBlog

RE: Clear Energy AllianceBackground
Clear Energy Alliance (CEA) describes itself as “the latest venture of Mark Mathis who has spent most of his career challenging widely accepted ideas that are simply untrue.”

Before starting CEA, Mathis founded another pro-fossil-fuel group called Citizens’ Alliance for Responsible Energy (CARE). While heading CARE, Mathis testified before Congress “on the dangers of anti-energy extremist groups.”

CEA primarily produces videos criticizing renewable energy and mainstream science on climate change. According to its website, “Much of what the media and activist groups tell us about energy is misleading or entirely false, which can lead to dangerous and expensive outcomes.”

According to corporate registry records, CEA was filed as a foreign LLC company in November 2017. It was organized in Delaware and operates out of the state of Florida.

CEI primarily produces videos on YouTube and has regularly paid to promote its videos across Facebook.

Pro-Oil Documentaries

Through CEA, Mathis produced two pro-oil documentary films: Fractured, and spOILed, with the latter celebrating “the incredible lifestyle oil has given us.” The description for Fractured contends that “common terms such as ‘fossil fuel,’ ‘alternative energy,’ ‘clean energy,’ ‘mother nature’ and ‘fracking”’ are highly misleading. These incorrect terms deceive the public about the essential nature of oil, gas, coal and nuclear power and cause people to believe in expensive, dangerous illusions.”

In a 2012 interview with The Texas Tribune, Mathis confirmed the film’s funding sources included individuals from the fossil fuel industry:

“I raised money from independent small investors, some of whom have interests in small independent oil and gas companies. These people were willing to put forth money to get this movie made because these are frustrated people. They’re very frustrated. They feel like they are misportrayed,” Mathis said.

The film was represented by the public relations firm D.W. Turner, which also represents BHP Billiton New Mexico Coal, BP America, Chevron and others with energy-industry ties, Farmington Daily Times reported in 2011.

An IndieGogo funding campaign also raised $16,582 USD for the film, with the backers list including small oil companies.

Before producing pro-energy documentaries through CEA, Mathis worked with another group to help produce a pro-intelligent design documentary entitled Expelled: No Intelligence Allowed. Several prominent scientists criticized Mathis for including them in his film without explaining what Expelled was about (and introducing it under another name). The anti-defamation league also released a statement on the film, alleging it “misappropriates the Holocaust and its imagery as a part of its political effort to discredit the scientific community.”

Stance on Climate Change — March 2018

Mark Mathis compared climate models to fortune tellers in a Clear Energy Alliance video, listing off a range of unrelated computer models (for elections, hurricanes, and stock markets) as evidence that climate change models are unreliable.

Recent Actions of the “Clear Energy Alliance”

May 9, 2019

The Clear Energy Alliance, represented by Mark Mathis, signed on to an open letter organized by the American Energy Alliance designed to fight against an electric vehicle tax credit.

“The American Energy Alliance has organized a coalition to proclaim in one unified voice that there should be no expansion of the misguided electric vehicle tax credit,” Thomas Pyle wrote in a statement, quoted at The Daily Caller. “There is no question that the electric vehicle tax credit distorts the auto market to no gain.”

According to Pyle and others who signed the letter, electric vehicle tax credits “overwhelmingly benefit the rich.” DeSmog’s Koch vs. Clean project has systematically debunked this, among other well-rehearsed talking points and misinformation put forward by industry about electric vehicles.

The letter cites research by the Pacific Research Institute (PRI), a group that has received over $600,000 from ExxonMobil and millions from “dark money” groups DonorsTrust and Donors Capital Fund.

May 2, 2019

CEA posted a video narrated by Marc Morano titled “Bad Data.” The animated video featured images of dogs urinating on carpets as an analogy for what Morano perceives as scientific malfeasance. Citing the opinions of other climate science deniers as proof of “dodgy distortions” in climate studies, Morano claimed that the scientific consensus on climate change is founded upon flawed studies:

“Remember when kids used to tell their teachers, ‘the dog ate my homework.’ Well, now we’ve got some climate change scientists who might as well be saying the same thing about the raw data backing up their research. A lot of the data is incomplete, inconsistent and just flat out wrong,” Morano said.

“It’s no laughing matter because this research is being used as justification for spending trillions of dollars on policies that probably won’t do anything more than bankrupt the world.”

March 31, 2019

Dallas News commented on a video that Clear Energy Alliance and Mark Mathis had released in June 2018 entitled “Solar Value Eclipse” that portrayed renewable energy sources as “a privileged part-timer who arrives late, does work others could easily do, and then leaves while everyone else is working full tilt.” The video also references a report by the industry-funded Institute for Energy Research.

The article notes that CEA has it “backwards” when it assumes that, without traditional power plants and with a switch to renewables, there will be no one to provide energy during peak demand.

“The fact that renewable generators only produce power during part of the day does impose a cost, but not on consumers; these costs fall on renewable generators themselves. For power companies that produce during peak periods, this lapse in production on the part of renewable generators represents a profit opportunity. Indeed, despite a rapid growth in renewable generation in Texas, electricity prices have fallen further than those in any other state and reliability remains high.” [37]

February 19, 2019

According to Facebook’s archive of political advertising, Clear Energy Alliance launched a series of ads criticizing aspects of the Green New Deal that would push for measures to combat climate change.

“Even attempting to implement the Green New Deal would be incredibly disruptive and unimaginably expensive—not to mention impossible,” some of the ads read.

One ad links to a CEA video that portrays fossil fuels as being “under attack.” In the video, Mark Mathis claims that, like fossil fuels, “Capitalism, industrialization, national sovereignty, and even freedom of speech are all under attack.”

For more misleading activities, see the following:


S. Thomas Bond June 12, 2019 at 10:27 am

When you give it a though, big industry is about profit. Return to investors. Of course they don’t want severance taxes, or any other kind of taxes. That directly cuts into what investors (and managers) receive. The company providing a service is coincidental.

Government was supposed to be of the people, by the people and for the people.

But, lobbying has changed all that.

Lobbying is a good investment. Ugggh!

You vote and I will vote. Let’s all vote!


State Impact PA June 26, 2019 at 4:42 pm

Groups criticize state budget shifting $10 million from environmental fund

By Marie Cusick, State Impact PA, June 26, 2019

A coalition of sixteen environmental groups sent an open letter to Gov. Tom Wolf and legislators Tuesday decrying the transfer of approximately $10 million out of Pennsylvania’s Environmental Stewardship Fund in this year’s state budget.

The fund was established nearly two decades ago to support environmental programs, including flooding and storm water management, Chesapeake Bay cleanup efforts, and farmland preservation.

The budget, which is expected to pass this week, shifts the money to general government operating expenses. Joanne Kilgour heads the Pennsylvania chapter of the Sierra Club and said the state has been seeing increasing strains on its built and natural environments.

“It’s absolutely the wrong direction to be decreasing, rather than increasing, our contributions to environmental programs through the state budget,” Kilgour said.

The letter goes on to criticize lawmakers for expanding the state’s Rainy Day Fund, noting that Pennsylvania has been seeing more precipitation and flooding — the kinds of issues the Environmental Stewardship Fund was meant to address. They wrote that it delivers “on-the-ground results for communities now, and helps us avoid future costs from water pollution and property damage.”

Wolf’s spokesman J.J. Abbott said the proposed transfers in the budget would not cut previously allocated environmental projects.

“We believe these transfers will not affect or decrease the output from the [Environmental Stewardship Fund],” he wrote in an email.

Abbott added that Wolf’s Restore PA plan — a $4.5 billion infrastructure proposal that is separate from the state budget — would “dwarf” any previous environmental investments in the state. It outlines ways to address flooding, stormwater, new green infrastructure, brownfield clean-up, and the development of clean energy. Those investments would be funded through a severance tax on natural gas production.

As PA Post reported, Restore PA is Wolf’s fifth attempt in office to enact a severance tax, and it looks like lawmakers will not take it up until the fall.


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