MDN Weekly Update – Nov 6, 2011: Should PA Tax Gas Drilling?

poll resultsAfter an initial rush of voting where it seemed MDN readers would not support the concept that it’s time to litigate for landowners’ rights in New York, the tide turned later in the week and a clear majority of NY landowners (and those who support them) have said it’s now time to sue the DEC to stop the delay tactics. It seems most people think three and a half years is enough time. The DEC’s draft rules are “good enough” and it’s now time to adopt them and move forward with drilling, according to MDN readers and last week’s poll.

Is it time for NY landowners to sue the DEC to allow fracking?

Yes (57%, 182 Votes)
No (43%, 136 Votes)

Total Voters: 318

What kind of fee/tax should PA assess on Marcellus wells, if any?

Pennsylvania lawmakers are close to completing new legislation that will strengthen rules for drilling in the Marcellus and Utica Shales, and assess a new “impact fee” on drilling. Gov. Tom Corbett, in just his first year in office, has remained steadfast against a severance tax on drilling because, as everyone knows, the money will disappear into the state’s budget hole to be used however politicians want to use it—mostly rewarding political friends with largesse and buying votes. Instead, Gov. Corbett’s advisory commission has recommended the state adopt an “impact fee,” which is a polite way of saying a tax. But most of this fee/tax will stay local, in the community where the well is drilled, to help with things like roads and first responders and police—things that start costing more when drillers show up. Seems a good solution to MDN.

The proposed plan that most likely will get adopted is that drillers will pay $40,000 the first year a well is drilled, $30,000 the second year, $20,000 the third year and then $10,000 per year in years 4-10, for a total fee of $160,000 per well drilled.

But many people who support a severance tax in PA point to other states like Texas and Wyoming and Alaska and say if oil and gas drilling is booming there and they can have a severance tax (that contributes a lot of money to the state budget), why shouldn’t PA? It’s a fair question. Those who support drilling in PA will say that Marcellus drilling is doing so well in the state precisely because there isn’t a tax on drilling—that drilling in PA is pulling drilling away from those other states because doing business in PA is more economically advantageous.

MDN wants to know what you think. Should PA adopt an impact fee? Or a severance tax? Or perhaps stick with no fees or taxes on drilling at all? Head on over to the right side of any page and cast your vote.

Below are the most recent “top 5” lists and the calendar of Marcellus related events for the next two weeks.

Happy reading,
Jim Willis, Editor

Five Most Viewed Stories This Past Week (Oct 30th – Nov 5th)

  1. Rex Energy Completes its First Utica Well in Western PA (11/2/11)
  2. NY Hydraulic Fracturing Advisory Panel Member Speaks Out (11/2/11)
  3. How Will NY Gov Cuomo Handle the Fracking Mutiny? (10/31/11)
  4. Major Discovery – Chesapeake Energy Strikes Oil (and Gas) in Ohio’s Utica Shale (7/29/11)
  5. Mystery Company Invests $2.14B in Chesapeake Utica Shale JV (11/4/11)

Five Most Viewed Stories Last 30 Days (Oct 6th – Nov 5th)

  1. Major Discovery – Chesapeake Energy Strikes Oil (and Gas) in Ohio’s Utica Shale (7/29/11)
  2. Ohio Utica Shale Permits Double in Last 3 Months (10/13/11)
  3. List of 78 Chemicals Used in Hydraulic Fracturing Fluid in Pennsylvania (6/30/10)
  4. New PA Study: No Link Between Fracking & Water Contamination (10/24/11)
  5. Belmont County, OH Landowners Sign Utica Shale Leases (9/19/11)

MDN Calendar (Nov 6th – Nov 19th)


New York



  • Anonymous

    Whatever tax New York State eventually institutes [ I prefer the local impact tax] , it must be in the ballpark of  Pennsylvania taxes . Too high compared to Penn. and it will slow development of the gas industry. Expect anti-drilling groups to try to do just that.

  • Anonymous

    STOP BIG GOV … get the stupid polititions out of the American Citizens pockets and lives. VOTE THEM OUT OF OFFICE NOW. Take Back American.

  • Anonymous

    Your poll is flawed. Why must we chosse between the taxes. Why not impose both at reasonable rates? We need a fourth choice.

  • Anonymous

    I am a
    landowner under contract, still waiting patiently (really) to see any drilling
    or revenue. But I am also a citizen who is highly concerned about our environment
    and also highly concerned about those who have less than I and who are unable
    to protect themselves.

    The problem
    with any locally imposed fee or regulation is that most townships (or other
    forms of local government) are too small to effectively deal with the big
    energy companies. If township A feels 5% is the right amount and township B
    feels that 3% is enough, the big companies can just bypass township A and do
    business where the taxes are lower or regulations less stringent.

    While that
    is probably the right thing for the companies to do representing their owners,
    it will often lead to poor results for the citizens. In such a system all
    townships will be highly incented to have no taxes and no regulations or suffer
    the alternative of no participation at all. However if the taxes and
    regulations are imposed at the state level, it is much harder for the big
    companies to simply walk away from an entire state and move on to the next

    Is it still
    possible for companies to “move on to the next state”? Sure. For that
    reason I would strongly support at least some level of federally imposed
    environmental regulations. And I would at least consider a federal tax as well.
    After all, environmental problems affect everyone and they are hard to predict
    and prevent, particularly in such a lightly regulated industry as this one is
    now. When a major event happens (like say, Love Canal, the “superfund cleanup”
    sites, or the gulf oil spill) all of us taxpayers nationwide pay the tab regardless of
    where it occurs.

    In your
    simple little poll you combine the issues of who does the taxing and how the
    money is spent. But these are two very different issues.

    Frankly I have very
    low respect for most of our politicians in all parties and at *all* levels. The clowns at the top
    have turned our government into a politically motivated public circus
    that is not only extremely ineffective, but has made us the laughingstock of
    the world. Do I want them to decide how my tax dollars are spent? No, not
    really. But there is unfortunately no shortage of inept and/or corrupt
    politicians at all levels, so shifting the decision to lower levels doesn’t
    make it any better, but rather just confines any possible benefit to a smaller constituency
    (and I *think* makes it less likely that the scoundrels will eventually be

    For all of
    the above reasons, I would prefer a system with:

    imposed *environmental* regulations, supplemented by additional state and local environmental
    regulations as necessary.

    ·        State
    imposed *taxes* with designations for an adequate portion of the money
    to be spent locally, and the option for local municipalities to impose
    additional taxes (recognizing that if they do so in any significant way, they
    may well be bypassed by the energy companies).


  • Well, er, I didn’t think of that! If I had, I would have included it. Since we’ve already had a good number of people vote, I don’t think it would be fair to add it in now. But thanks for pointing that out.

  • Anonymous

    I think it’s also important to include the cost of the extensive work (invasive species surveys, pad setbacks, etc.) that operators will be forced to do under the proposed SPDES General Permit conditions and changes to 6 NYCRR. This may tip the scales in terms of an impact fee, given that PA requires little of this