Important & Overlooked Details on PA Gov Wolf’s Severance Tax

More details continue to come out about PA Gov. Tom Wolf’s Marcellus-killing severance tax. For example, did you know that towns and counties that previously received money from the impact fee will continue to get money under this tax–but that the amount they get will be capped? Under the existing impact fee the more drilling in an area the more money that area receives to compensate for the drilling (roads that need repairing, beefing up first responders, etc.). No more. Under Wolf’s plan, there is an upper limit on how much money he’s willing to give those locations that actually see drilling. The rest, you see, must go to pay off campaign debts to teachers unions. Another fatal flaw in Wolf’s severance tax: He calculates the tax based on $2.97 per thousand cubic feet sale price, regardless of what the actual sale price is. Do you know what the sale price for natural gas at the Leidy hub was on March 13th? It was $1.435/Mcf–about half of what Wolf is using as the standard rate. That means the effective tax rate for drillers selling gas for $1.435 is twice what it is for drillers selling at Wolf’s magical $2.97. What do you think drillers in northeast PA (near the Leidy hub) will do? That’s right. Shut in their wells and lay down their rigs…

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