This page was last updated on October 8, 2010.
State must have a severance tax; Rebecca Deiter; Beaver County Times; October 6, 2010. At the time I wrote this critique, this letter appeared only in the print edition of the Times.
In previous letters, Mrs. Deiter claimed she was barraged by “negative untrue attacks about Barack Obama” via e-mail and defended ACORN. In another letter, Mrs. Deiter and her husband supported a charter school (“Charter school deserves a chance”, 1/6/10).
Below is a detailed critique of the subject letter.
“By now, Pennsylvania residents are aware of the impact of Marcellus Shale.
“As I sat in traffic on I-79 Thursday night, I couldn’t help but notice a line of large trucks. These trucks were from Houston, Texas, and they were clearly identified as belonging to Halliburton.”
[RWC] Oh no, the Halliburton boogeyman! Hide the women and children!
“I wouldn’t have thought much about it, but my radio was playing a political message from Tom Corbett, the GOP candidate for governor.”
“In his message, Corbett stated his case against levying a severance tax for drilling for gas in the state.
“He was suggesting that we allow companies that are drilling wells to police themselves and make sure that they buy adequate insurance to cover any violations.”
[RWC] I heard the Corbett ad many times and it does not “suggest that we allow companies that are drilling wells to police themselves,” not even close.
The insurance isn’t “to cover any violations,” it’s to cover potential damage.
As I’ve written before, companies harvesting our natural resources must do so in a responsible manner and must have the financial and technological wherewithal to handle worst-case scenarios and post-production cleanup. It is government’s responsibility to enforce these rules and to make sure everyone involved [businesses and government (local, state, federal)] is prepared (via drills, for example) to execute disaster plans.
“From my perspective, that’s like the inmates running the asylum. House Bill 1155 with the Harper amendment provides that revenue gain from the severance tax have at least 32% of the money dedicated to environmental stewardship fund.”
[RWC] Why should a tax on Marcellus gas go for anything other than covering regulatory costs? Anything else is creating a slush fund for politicians to spend.
“This bill passed the House last week and makes sense. Pennsylvania is only one of 11 states in the country, most of which are in the Northeast, without a severance tax. Texas has a 7.5% severance tax on the revenues from gas drilling.”
[RWC] Texas taxes natural gas production at 7.5% of market value plus a regulatory fee of $0.000667 per thousand cubic feet, with variances for natural gas that’s expensive to produce. I’m not an expert, but a lower tax rate than Texas and some other states may be appropriate due to the higher costs of producing from formations like the Marcellus shale.
Keep in mind, though, natural gas consumers (you and I) will ultimately pay any severance taxes via our gas bills. Funny how Mrs. Deiter doesn’t remind us of that fact, isn’t it?
“Maybe that’s why Halliburton is so far from home.”
[RWC] Mrs. Deiter must not know Halliburton is an oil/gas services company. Halliburton simply provides services to companies exploring and/or drilling for oil/gas. Halliburton itself is not an oil/gas producer. As a result, regardless of the tax, it would not affect Halliburton.
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