Natural Gas Severance Tax: An Economy Killer

From labor unions to local chambers of commerce, community leaders are expressing a lot of anxiety over Governor Wolf's natural gas severance tax proposal.

The proposed tax “is a Wyoming County economy killer,” says Gina Severcool Suydam, executive director of the county’s chamber of commerce, in a letter to the Scranton Times Tribune.

Ms. Suydam attributes to the gas industry impressive economic gains in the county between 2007-2012:

• 29 percent in average weekly wages — from $700 to $904.
• 148 percent in average weekly wages in the natural resources and mining industry — from $642 to $1,594.
• 134 percent in annual payroll — from $273 million to $639 million.

The biggest threat to the industry now is the proposed severance tax, says Ms. Suydam. It would be a serious additional cost burden in maintaining the competitiveness of Pennsylvania gas, consuming any advantage our producers currently have over gas from other areas.

Then there is Dennis Martire, vice president and Mid-Atlantic regional manager of the 40,000-member Laborers’ International Union of North America, who is quoted in a recent news release:

We already have seen a reduction in pipeline man-hours over the past two years related to falling gas prices,” reports Mr. Martire. If you excessively tax the shale industry, you risk hurting employers, workers and communities across the state.

The economic depression of the gas industry noted by Mr. Martire continues to be manifested in cutbacks in southwestern Pennsylvania: 220 jobs lost at Noble Energy and 170 jobs at Consol Energy.

Adding a tax to the current economic struggles of a promising industry would be ill advised. Or as Speaker of the House Mike Turzai (R-Allegheny) says:

The governor’s approach on a severance tax is punitive in nature and threatens to severely hurt hard-working Pennsylvania laborers, negatively impact family-sustaining jobs and shut down production and downstream benefits for all Pennsylvanians.