Taxation

Industrywide Issues | Pennsylvania | Statewide PA | Taxation

PA Libs Renew Call for Severance Tax, O&G Industry Pushes Back
February 11, 2013February 11, 2013

Liberals everywhere believe that high taxes and massive spending will cure all of society’s ills. Well, they actually don’t believe that, but they do get intoxicated on the power that comes from spending other people’s money—and it tends to keep them in power when they spend enough of it on people who didn’t earn it and won’t work for it.

Such is the situation in Pennsylvania. The new “impact fee” on oil and gas drilling in the state—which is really a tax—is not even five months old, and already the libs (i.e. Democrats) are calling for a new severance tax on oil and gas drilling. The Pennsylvania Oil & Gas Association is pushing back:

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Industrywide Issues | Ohio | Statewide OH | Taxation | Utica Shale

Details of OH Gov. Kasich’s Utica Shale Severance Tax Hike
February 6, 2013February 6, 2013

Ohio Gov. John Kasich released his budget for fiscal years 2014 & 2015 yesterday, and along with it, he resurrected the same plan he first introduced a year ago to increase severance tax on oil and gas production in the Utica Shale (see Details on Ohio Gov. Kasich’s New Tax on Shale Drilling). The plan in a nutshell: Hike the severance tax on Utica Shale drilling, then spread the new-found wealth around to buy votes to get re-elected.

Here’s a summary of the coming changes (and make no mistake, the plan will pass this time):

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Industrywide Issues | Ohio | Statewide OH | Taxation

OH Gov. Kasich Budget Soaks Drillers & Farmer Landowners
February 5, 2013February 5, 2013

Ohio Gov. John Kasich (supposedly a Republican) just released his biennial budget and as promised, it’s a socialistic masterpiece that raises taxes on shale drillers and farmers in order to fund a massive expansion in Medicaid and provide a state income tax cut.

When liberals like what you’re doing and you’re a Republican, that’s not a good sign…

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Industrywide Issues | Pennsylvania | Statewide PA | Taxation

Law Firm: PA Drillers/Contractors Paying Taxes They Shouldn’t
January 29, 2013January 29, 2013

According to the law firm Reed Smith, drillers in Pennsylvania may be paying sales tax for equipment used in hydraulic fracturing and drilling that is exempt from PA sales tax. The PA Dept. of Revenue has been issuing tax assessments to drillers that are, according to Reed Smith, in contradiction of existing law.

If you’re a landowner or peripherally interested in Marcellus drilling, give this article a pass. However, if you’re a driller or a drilling contractor of any kind, you need to pay close attention…

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Anti-Drilling/Fossil Fuel | Industrywide Issues | Pennsylvania | Regulation | Statewide PA | Taxation

PA DEP Pushes Back: We Did NOT Undercount Wells for Impact Fee
January 24, 2013January 24, 2013

A newly-minted Ph.D. from Penn State, Joel Gehman, got his first teaching job last year as an assistant business professor at the University of Alberta in Canada. He wasted no time in addressing the issue of “publish or perish” in academe. In May of 2012, even before he began his official duties at UA, he co-authored and published a paper titled, “Fracking Patents: The Emergence of Patents as Information Containment Tools in Shale Drilling.” The title itself tells you about Dr. Gehman’s proclivities when it comes to the issue of fracking. (Learn more about his views on his blog). This month Dr. Gehman is back as lead author of a new paper published in the journal Environmental Practice titled, “An Analysis of Unconventional Gas Well Reporting under Pennsylvania’s Act 13 of 2012.”

Dr. Gehman’s new paper makes the strong claim that the DEP did not exploit loopholes in the new Act 13 law to drain every last penny they could via the new impact fee/tax on oil and gas wells, thereby leaving up to $303 million uncollected (see our story Did PA DEP Undercount Act 13 Wells & Forfeit $303M in Revenue?). Michael Krancer, Sec. of the DEP, sent a letter to Gehman on Tuesday with some pretty strong claims of his own…

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Industrywide Issues | Pennsylvania | Regulation | Statewide PA | Taxation

Did PA DEP Undercount Act 13 Wells & Forfeit $303M in Revenue?
January 10, 2013January 24, 2013

Note: MDN’s headline originally stated “$100M” in revenue was forfeited. The study’s lead author, Joel Gehman, contacted MDN to correct that number. We misunderstood. They believe the DEP has forfeited two to three times that amount: $205-$303 million.

In an attempt to shame the Pennsylvania Dept. of Environmental Protection (DEP) into action to improve their data reporting for unconventional shale wells, researchers at the University of Alberta and McGill University (both in Canada) have published a paper in the journal Environmental Practice claiming the DEP undercounted the number of natural gas wells used for assessing the new Act 13 impact fee, thereby denying the state an extra ~~$100~~ $205-$303 million they could have received in tax revenue (see article below).

The article/study is titled “An Analysis of Unconventional Gas Well Reporting Under Pennsylvania’s Act 13 of 2012” and is peer reviewed, which supposedly blesses it as being accurate. However, the PA DEP strongly objected to the methodology used by the researchers and has said, point blank, they misunderstand the Act 13 requirements for what constitutes an unconventional well under the Act 13 law. DEP says there is no missing tax revenue due to an undercount. The researchers glibly reply the purpose of the article is to needle the DEP into “fixing” their data problem.

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Industrywide Issues | Regulation | Taxation

Accounting Tax Provisions are Not Subsidies for Big Oil & Gas
January 3, 2013January 3, 2013

An important and insightful article appeared on the Forbes magazine website yesterday, detailing the rank hypocrisy by mainstream media in their reporting about “subsidies” for “big oil and gas.” The point of the article: There are no subsidies for oil and gas companies.

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Industrywide Issues | Ohio | Statewide OH | Taxation

OH Gov. Kasich Keeps Beating the Higher Drilling Tax Drum
December 27, 2012December 27, 2012

What is it about states like Texas that causes Ohio’s Gov. John Kasich to view them as “foreign” and their citizens as “foreigners” (see this MDN story). An anal retentive fixation on the part of Kasich? Perhaps.

His fixation is in full bloom again. Kasich reports he recently went on some “foreign travel”—to Houston, Texas—where he had private discussions about raising taxes. Kasich also has a fixation on raising taxes on the drilling industry in Ohio so he can “spread the wealth” around to everyone:

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Anadarko | Energy Companies | Hydraulic Fracturing | Industrywide Issues | Pennsylvania | Statewide PA | Talisman Energy | Taxation

PA PUC Rules Against Anadarko & Talisman on Impact Fee
December 21, 2012December 21, 2012

Contrary to the wishes of Anadarko Petroleum and Talisman Energy, the Pennsylvania Public Utility Commission (PUC), charged with collecting Act 13 impact fees from shale drilling in the state, ruled that setting conductor pipe does in fact trigger or require a company to pay an impact fee from that point forward. Anadarko and Talisman had argued it does not constitute spudding (or starting the drilling process) for a well. The impact fee is levied when a well is spud.

From the PUC announcement yesterday:

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Industrywide Issues | Ohio | Statewide OH | Taxation

OH Republicans Set to Cave on High Drilling Tax
December 20, 2012December 20, 2012

Are Ohio Republicans about to cave on supporting the dreadfully awful idea of high severance taxes on shale drilling in order to “spread the wealth around” by transferring that money into a fund to allow a state income tax cut? Sadly, it seems the answer is “yes.”

Yesterday at a press conference, Ohio House Speaker Bill Batchelder (Republican from Medina) said he thinks Republicans will support a higher severance tax once their palms are greased with pork projects they understand more about it.

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Industrywide Issues | Ohio | Public Opinion | Statewide OH | Taxation

OH Poll Shows Support for Higher Drilling Tax is Slipping
December 14, 2012December 14, 2012

A new Quinnipiac University Poll shows a majority of Ohioans continue to support a higher severance tax (what they term a “new tax” when asking the question) on the shale drilling industry—especially if it would cut their income taxes. But the simple headline does not reveal the whole picture.

When you look at the internals of the poll (full copy of the questions and results is embedded below), you find that (a) support for the tax is slipping, and (b) it’s Ohio Democrats who support the tax in large numbers, while Republicans only tip to the support side when it comes to the question of lowering income taxes.

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Housing | Industrywide Issues | Pennsylvania | Statewide PA | Taxation

PA Housing Approves $7.6M in Spending from Impact Fee Fund
December 14, 2012December 14, 2012

Part of the Pennsylvania “impact fee” assessed on Marcellus drillers in the state (collected by the state’s Public Utility Commission) was set aside for a special Housing Affordability and Rehabilitation Enhancement fund. In addition, local municipalities also set aside some of their own impact fee revenue for housing projects.

Yesterday, the Pennsylvania Housing Finance Agency (PHFA) approved using more than $2 million from a total pot of $7.6 million on a list of housing projects in northeast PA. The projects include new housing for senior citizens and low-income residents, help for landlords to rehabilitate rental properties, and aide to low-income individuals for rent. Here’s a list of some of the projects in NEPA funded by the impact fee money:

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Industrywide Issues | Ohio | Regulation | Statewide OH | Taxation

Ohio Legislature Sees Flurry of Shale Drilling Bills
December 10, 2012December 10, 2012

As the Ohio General Assembly comes to a close later this month (the end of their two-year term), Democrats have introduced a number of bills aimed at restricting the Utica and Marcellus Shale drilling industry in the state. Fortunately the Assembly is controlled by Republicans, so these bills will go nowhere. Still, it’s instructive to see what’s on Democrats’ hearts and minds, and possibly what the future holds if the political winds in Ohio change.

Here’s the list of bills recently introduced, and a summary of what they would do:

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Industrywide Issues | Pennsylvania | Statewide PA | Taxation

PA Landowners: Planning for the Tax Man in PA
December 5, 2012December 5, 2012

End of the year means it’s time to consider taxes (bloody awful if you ask us!). If you live in Pennsylvania and if you’ve leased your property for drilling (and perhaps even have royalties from drilled wells), you need to plan for the tax man—especially if you’ve sold your lease rights/property. All we can say is, a) it’s complicated, and b) find a lawyer/accountant to help you.

The law firm of McNees Wallace & Nurick LLC, with offices throughout PA, publishes a monthly newsletter. In the December issue they highlight a recent guidance document from the PA Dept. of Revenue dealing with Marcellus-related transfers and income taxes. If you’re a landowner with leases, you may find it interesting. If you’re a lawyer or accountant specializing in the Marcellus, you’ll definitely find it interesting:

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Industrywide Issues | Statewide WV | Taxation | West Virginia

WV Considers ‘Future Fund’ to Stash Away Oil & Gas Revenue
November 20, 2012November 20, 2012

A USA Today article from yesterday takes a new swipe at the theme “Alaska and other states tax oil and gas and create a rainy day fund, so West Virginia, Pennsylvania and other states should do it too.” Should they? Pro-drillers will have differing opinions. What is interesting to MDN about the story, aside from the list of states that currently tax oil and gas (and what they do with it), is what West Virginia is considering, and the “let’s face reality, fracking is here to stay” comments attributed to a liberal group in the state.

The bits from the article relevant to the Marcellus and Utica Shale:

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Energy Companies | Exxon Mobil | Industrywide Issues | Taxation

Exxon Mobil Foolishly Backs Obama Carbon Tax Idea
November 16, 2012November 16, 2012

Exxon Mobil is a major disappointment. Since 2009 they’ve supported a so-called “carbon tax” over what they consider a less-desirable alternative—legislation capping carbon dioxide emissions. Carbon dioxide, in case you didn’t know, is the substance you breathe out with every breath you take. Plants breathe it in. Plants, on the other hand, expire oxygen that we animals breathe in—something called the circle of life. Obama and green wackos want to tax carbon dioxide emissions in the misbegotten belief it’s “polluting the planet” and that by taxing it, you will cause its use to go down. (Maybe a tax on breathing will be next?) Boggles the mind.

What boggles the mind even more is Exxon’s support for the idea. A carbon tax is nothing more than a huge, new tax increase that gives greedy politicians more money to play with, reduces manufacturing activity (and jobs at those manufacturers), and overall is about the worst idea anyone has had in oh, about a century.

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