Another push for a gas tax

[CodorusTUTom]

Got this from PennFuture's 'Session Daze" e-news. We'll see where it goes.


"Drillers to get message to pay their fair share Tuesday.
Representative Greg Vitali (D-Delaware) plans to introduce a new bipartisan bill to tax drilling for natural gas deep in the Marcellus Shale at a Tuesday Capitol press conference with legislators, conservation and outdoors groups, and other public interest organizations.

Pennsylvania remains the only gas producing state without a drilling tax. The tax rate in the bill will be just below that of neighboring West Virginia, where the drilling industry is thriving with the tax.

This bill allocates one-third of the drilling tax revenue to environmental programs, one-third to local governments "hosting" the drilling, and one-third to the General Fund. Pennsylvania's popular and extraordinarily beneficial Growing Greener program is nearly out of money. The drilling tax bill would provide an estimated $78.6 million to Growing Greener in the 2011-12 fiscal year, $102.3 million in 2012-13 and $128.2 million in 2013-14."

Here's more info: http://www.pahouse.com/PR/166020211.asp

 

[pcray1231]

eh, I'm torn.

One thing I am quite sure of my feelings on is that any tax money recieved should NOT go towards the general fund.

I think monitoring and repairing any damage which occurs should be done as the result of steep fines for violations, whether they result in pollution incidents or not. But I'd be ok with a straight up tax, with the proceeds going towards PennDot and the local municipalities that host drilling. Road degradation is the one problem thats going to be there nomatter what, it can't be avoided. And the industry should pay for it.

As far as pollution issues, I maintain that its avoidable, and in order to avoid it, you must have a strong penalty/reward system for the individual companies. If the good companies are paying for the mistakes of the bad companies, then there's no incentive to be a good company.

 

[CodorusTUTom]

Couldn't agree with you more pcray. I guess my attitude at this point is just 'well I guess it's better than nothing.'

 

[franklin]

Would the third going into environmental programs help pay for the cost of inspections and monitoring? I would support 1/3 going into the general fund. Aside from PennDOT I think there are expenses to other state departments such as Pa State Police, etc. that don't get picked up in the other 2/3 of dedicated funding.

BTW the original growing greener funding came from a $600M+ bond issue. That was supposed to be funded through "tipping" fees at landfills. I get the impression that the payback is underfunded. Anyone know what the situation is there? Could be a big portion of the growing greener revenue coming from a gas tax is needed/used to pay back the bond?

 

[pcray1231]

The general fund is getting a cut either way. Employees are making $ in PA, and thus pay PA income taxes. Further the company will pay PA taxes on profits. The question is whether there should be extra "sin" taxes for being involved with drilling, and I say only to the extent that they cost the state money.

Revenue directly from the companies should go towards mitigating the effects of that company's drilling only. A good company should pay only what they are responsible for, which may include roads, water use, etc. But any clean-up issues should be funded solely by the companies who caused the necessity for the cleanup. If you have violations and accidents, you have to pay to clean it up, times 3 for our troubles with having to deal with you.

 

[jdaddy]

Pat,

The same logic applies to local impacted communities. Theoretically they are the ones getting the jobs, thus the tax base and benefits to the local economy. Why would they be entitled to 1/3 of the money?

 

[pcray1231]

Because many of the roads that will be most effected are township roads, and the cost of repair of those roads may be considerably larger than their increase in tax revenue. Especially true if the workers don't live in that municipality, a lot of places don't have income taxes in place for non-residents, and recieve much of their money from real estate taxes. And if the company does some business there but isn't centrally located there, they may not pay much either.

 

[jdaddy]

Hmmm. That seems contrary to the pro-drilling folks who state plenty of jobs are being created for the local economy. (I'm obviously being antagonistic here, that's their logic of why we should not create this corporate killer tax).

Frankly we are lucky that 100% of it does not go to the state fund. The current administration callously could not give a #OOPS# less what you think about it either.

 

[pcray1231]

When I say non-resident, I mean non-resident of the municipality, not necessarily of the state.

Yeah, some workers are local PA guys, some are from another state. In any case, they are based out of certain areas of the state, home bases for the companies.

So, for instance, a landscaping team might be based out of Altoona PA, a drill team out of Clearfield, a fracking team from Johnstown, etc. The well in question may be in Potter County. This week, the landscapers are there. Then it'll sit empty for a while. A few months down the road the drilling team shows up for a week, then empty again for a while. Then the fracking team from Johnstown shows up for 3 days, etc.

Even if they were all PA guys, the township thats getting drilled in Potter County has no residents on the team. Those same teams will temporarily work jobs in all areas of the state and are constantly on the move. But they only pay real estate taxes wherever they live permanently. Income taxes depend on the locality, nonetheless, if their employer is located in Altoona, they may pay a tax to work in Altoona even if none of the actual job sites are located there.

So the tax money collected is not always in the locality where the road work needs to be done.

 

[osprey]

When i watched the testimony of a gal spokesperson saying that the tax is built right into their budgets and acted sincerely surprised i knew there had to be sumpin..........sumpin.

 

[TimMurphy]

jdaddy wrote:
Pat,

The same logic applies to local impacted communities. Theoretically they are the ones getting the jobs, thus the tax base and benefits to the local economy. Why would they be entitled to 1/3 of the money?

Dear jdaddy,

I agree with this thought 100 percent. If anything the folks who signed the gas leases should be required to escrow money to pay for infrastructure damage. They are profiting beyond their contributions to the infrastructure maintenance and therefore should be required to pay for the damages.

None of the consequences of Marcellus drilling were unseen by anyone with more than a room temperature IQ but checks were coming in and people were making money.

As per usual the using the conventional thought processes that absolutely plague this State, those concerns were ignored with the knowledge that someone else will always be around to pay for them.

Regards,

Tim Murphy

 

[jeff]

pcray1231 wrote:
eh, I'm torn.

One thing I am quite sure of my feelings on is that any tax money recieved should NOT go towards the general fund.

I think monitoring and repairing any damage which occurs should be done as the result of steep fines for violations, whether they result in pollution incidents or not. But I'd be ok with a straight up tax, with the proceeds going towards PennDot and the local municipalities that host drilling. Road degradation is the one problem thats going to be there nomatter what, it can't be avoided. And the industry should pay for it.

As far as pollution issues, I maintain that its avoidable, and in order to avoid it, you must have a strong penalty/reward system for the individual companies. If the good companies are paying for the mistakes of the bad companies, then there's no incentive to be a good company.

What's wrong with a tax........... and steep fines for violations? You want to drill in MY forests you have to pay to play, peroid! As for the pollution issue being avoidable that is nonsense. I do however agree steep fines for violations will help keep incidents of pollution down.

 

[pcray1231]

I'm against the tax going to the general fund. Seems like just another way to collect money for pet programs without addressing the problem which justifies it.

Ask yourself, what is your goal here? To get a financial windfall for the state? Simply to oppose drilling? Or to try and prevent damage in the first place, while providing a system to force a company to fix any damage it might cause?

Fixed tax, with money going to the general fund =

"We WANT you to ruin the environment, because we want to justify collecting the money it would require to fix the damage. Except we won't really fix it, instead, we'll fund this completely unrelated program we've always wanted to fund but never had the money for. Thank you!"

No, IMO, the tax has to be structured so that there's financial incentive to prevent damage to begin with. Companies always do the most profitable thing. Make the most profitable thing to be clean.

And when damage does occur, yes, I'm in favor of collecting money to fix it. But you have to ensure the money goes towards fixing it, or else it won't get fixed and instead be used for something else thats deemed more important at the moment.

Pollution is avoidable, at least to an extent. Thats like saying plane crashes are unavoidable. Statistically speaking, it is going to occur somewhere, sometime, you're right about that. But you can certainly lower the frequency enough that its very rare. You do that by showing the company how much bad press they get, and the mess of fines, increased regulations, and lawsuits that occur for each crash. Suddenly, being blamed for a crash is the #1 fear of every company related to the industry, and they all gear themselves towards perfection. Likewise, you have to show the drilling companies that a single major pollution event is truly crippling for their business, and that they may have to adjust how they do things to go all out to prevent it.

I don't think you can avoid road wear issues, and to some extent sedimenation issues from clearing of land. But as far as water pollution, its very avoidable.

 

[jeff]

pcray1231 wrote:
I'm against the tax going to the general fund. Seems like just another way to collect money for pet programs without addressing the problem which justifies it.

Ask yourself, what is your goal here? To get a financial windfall for the state? Simply to oppose drilling? Or to try and prevent damage in the first place, while providing a system to force a company to fix any damage it might cause?

Fixed tax, with money going to the general fund =

"We WANT you to ruin the environment, because we want to justify collecting the money it would require to fix the damage. Except we won't really fix it, instead, we'll fund this completely unrelated program we've always wanted to fund but never had the money for. Thank you!"

No, IMO, the tax has to be structured so that there's financial incentive to prevent damage to begin with. Companies always do the most profitable thing. Make the most profitable thing to be clean.

And when damage does occur, yes, I'm in favor of collecting money to fix it. But you have to ensure the money goes towards fixing it, or else it won't get fixed and instead be used for something else thats deemed more important at the moment.

Pollution is avoidable, at least to an extent. Thats like saying plane crashes are unavoidable. Statistically speaking, it is going to occur somewhere, sometime, you're right about that. But you can certainly lower the frequency enough that its very rare. You do that by showing the company how much bad press they get, and the mess of fines, increased regulations, and lawsuits that occur for each crash. Suddenly, being blamed for a crash is the #1 fear of every company related to the industry, and they all gear themselves towards perfection. Likewise, you have to show the drilling companies that a single major pollution event is truly crippling for their business, and that they may have to adjust how they do things to go all out to prevent it.

I don't think you can avoid road wear issues, and to some extent sedimenation issues from clearing of land. But as far as water pollution, its very avoidable.

I agree that not all the tax should go into the General Fund but that sure isn't a reason not to impose one! I also don't think that there should be a ban on drilling. That won't happen anyway. I do think we should slow the hell down. I do think that we should have the resources available to help clean up the mess they leave behind. The environmental impact that the drilling will have in Pa is unavoidable up to this point because there are no meaningful safeguards in place. Please used frac water stored in open ponds??? What is separating this crap from our water table but freakin pond liners. Can you call that avoidable?? Are you implying that if we collect a tax that will give the drilling companies an excuse to cut corners? Pcray it's only gonna take 1 rare bad mistake and it could be your water that's polluted.

I admit it I want this to be as finacially painful as we can make it for these companies. if and when there is a pollution event I want the companies to wish they never drilled here at all. That's how I feel.

 

[CodorusTUTom]

What do the other states do with the tax money they collect? Anybody know?

 

[pcray1231]

environmental impact that the drilling will have in Pa is unavoidable up to this point because there are no meaningful safeguards in place.

Exactly, no safeguards in place. So whats the solution? To me, its to work on putting safeguards in place! Not to say we're resigned to not having safeguards in place, so go ahead and pay us up front so we can clean up the expected disaster.

Are you implying that if we collect a tax that will give the drilling companies an excuse to cut corners?

You're dang right I am. Developing new techniques, qualifying new materials, etc., all takes money. If you're taking the money either way, what kind of an incentive is that? None. Instead, it sends the message that they already paid for the expected disaster, and nothing from this point forward is going to change how much they pay for environmental concerns, so they can do whatever the heck they want.

I admit it I want this to be as finacially painful as we can make it for these companies.

And there's the bottom line. I want it to be financially painful only for the bad companies. Like it or not, economically this is huge for PA and all its residents, and good for the country as well. Overall, its a good thing. But, I want them to do everything in their power to avoid environmental damage, and no doubt about it, the worst effects are very avoidable.

This isn't a singular "industry", this is a collection of individual, and very different companies, all with different practices and ways of doing things. I want to handsomly reward the companies who go the extra mile to make sure that nothing happens that doesn't need to happen. These are the companies that audit and monitor themselves, who buy premium pipe thats much less likely to bust, who put the frac water in stainless closed tanks instead of lined pits, who are careful about water use and disposal, who train their employees to prevent accidents, etc. They're doing all this for profit too, they expect it to pay off in the end. Prevention is truly cheaper than the cure, but only if you're expecting to pay for the cure.

On the other hand, other companies are out for profit too, but they're betting that they won't get caught, or that if they do they'll get nothing more than a slap on the wrist. Unfortunately, so far, they're right, and the ridiculous profits they'll reap will discourage the good companies and attract more bad companies.

We have both varieties operating here today, and a number of in betweens. I want to run the bad companies out of town and chase them all over the place to recover the money they'll owe to fix their mess. The good companies, they are welcomed with open arms, and they can work with the DEP, our universities, etc. to improve practices well into the future.

 

[jeff]

pcray1231 wrote:

environmental impact that the drilling will have in Pa is unavoidable up to this point because there are no meaningful safeguards in place.

Exactly, no safeguards in place. So whats the solution? To me, its to work on putting safeguards in place! Not to say we're resigned to not having safeguards in place, so go ahead and pay us up front so we can clean up the expected disaster.

Are you implying that if we collect a tax that will give the drilling companies an excuse to cut corners?

You're dang right I am. Developing new techniques, qualifying new materials, etc., all takes money. If you're taking the money either way, what kind of an incentive is that? None. Instead, it sends the message that they already paid for the expected disaster, and nothing from this point forward is going to change how much they pay for environmental concerns, so they can do whatever the heck they want.

I admit it I want this to be as finacially painful as we can make it for these companies.

I want to run the bad companies out of town and chase them all over the place to recover the money they'll owe to fix their mess. The good companies, they are welcomed with open arms, and they can work with the DEP, our universities, etc. to improve practices well into the future.

Yep me too. Except you and I will have to disagree on how we get to that truly magical place.

The price to drill in our state should be the tax. That goes for every company. This will hardly put a dent in their pockets. You know that. To what fund that tax goes is up for debate. The steep fines, hard *** regulations and fierce penalties are for the bad companies. Here is a thought. Maybe if they know they can't store frac water in open pits and have to follow strict regs to the T the bad companies won't bother coming. Oh wait it's to late for that cause we already said drill baby drill before we thought about all that crap. Pcray as you lay the red carpet out to the drilling companies make sure you get out of the way cause you may get run over!

 

[jeff]

Thanks for the update greenghost!

This is just perfect huh? Let's welcome them with open arms??




http://www.bizjournals.com/pittsburgh/blog/energy/2011/02/marcellus-violations-for-january.html



Wow you have to read through these violations!! A lot of craziness going on. Something big and bad is gonna happen around these wells!

 

[pcray1231]

On my count:

Anadarko - 19
Chief - 16
XTO - 11
Cabot - 9
Talisman - 6
Chesapeake - 2
EQT - 1
Range Resources - 1
Carrizo - 1
Ultra - 1
East Resources - 1

Would like to see how many wells of each were inspected to get % for each company. But this kind of shows you who the bad companies are.