Another try in Pa. for shale gas tax

Posted: February 10, 2011

Pennsylvania supporters of a Marcellus Shale natural-gas-production tax are giving it another shot.

After failing to get what is formally known as a severance tax enacted last year, 57 legislators cosponsored a bill this week that they estimated would generate $245 million in its first year. They argue that Pennsylvania is the only major gas-producing state without such a tax.

The political climate may be less receptive this year. Republicans control both houses, and Gov. Corbett, as a candidate, declared his opposition last year to a severance tax. But supporters of the tax anticipate his convictions might soften in the face of what could be a $4 billion budget shortfall.

"People may not want an income tax or a sales tax, but they don't mind a tax on wealthy gas producers," Rep. Greg Vitali (D., Delaware), one of the cosponsors, said Wednesday.

The proposed Pennsylvania tax would be 5 percent of the value of each 1,000 cubic feet of natural gas severed, plus 4.6 cents per 1,000 cubic feet. At current gas prices, the tax would total about 6 percent of the market price.

Revenue would be equally divided among the general fund, environmental programs, and support for local governments in gas-producing areas, Vitali said.

The Marcellus Shale Coalition, a trade group, says it is willing to discuss a severance tax as part of a comprehensive regulatory modernization that would encourage natural-gas investment.

But the Pennsylvania Independent Oil and Gas Association, which represents traditional drillers, maintains its absolute opposition.

"I think that every year is going to be the same," Louis D'Amico, the association's president, said Wednesday, "until somebody figures out how to bleed more money out of the oil and gas industry."


Contact staff writer Andrew Maykuth at 215-854-2947 or amaykuth@phillynews.com.

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