It’s really kind of funny to watch lawmakers and “leaders” in the state of Maryland talk about drilling in the Marcellus Shale, which, if it were to happen in the state, would happen in two western counties: Garrett and Allegany. Earlier this year Gov. Martin O’Malley appointed a 14-member commission to study the drilling issue, with a final report not due until 2014.
It’s a really big “if” that shale drilling will even be allowed in the state, but just in case it were to be allowed, politicians from Washington, D.C. suburbs (like Montgomery County, Maryland) want to tax the living daylights out of it:
“What we’re talking about doing is setting parameters on revenue issues in advance of finalizing the question of whether we drill or not,” said Del. Heather Mizeur, D-Montgomery, who is on the 14-member commission.
Garrett County would impose a 5.5 percent county tax on any extracted gas.
“The question is, if you already have 5.5 [percent], what do you go above that?” said State Sen. George Edwards, R-Allegany & Garrett, who is also on the commission. “My position is that the most I would even consider would be a total of 10 [percent] which would mean 4.5 [percent] for the state.”
Mizeur is open to a much higher state-level tax.
“I’m inclined to say, because this is money that would be coming from the industry itself which would be poised to make billions of dollars in the extraction of this resource, that we should be, as a commission, focused on what the state amount should be, whether it’s 5, 8, 10, 12, 15 percent, whatever the number ends up being,” Mizeur said.
Edwards said the higher the tax, the less money that goes to landowners in the form of leases and gas royalties.
“You got to be careful how much you do it because whatever you put on that end takes away from the owners of the gas, which are mainly local people who’ve owned these gas rights for years,” he said.*
Let’s see, I’m a driller considering whether to drill in Maryland with a 10-15 percent severance tax, or drill just across the border in Pennsylvania with no severance tax but a reasonably low impact fee (tax) per well, which will I do?
Talk about dumb & dumber in Maryland…
*Maryland Daily Record (Nov 27, 2011) – ‘Fracking’ revenue looms large