The debate over if the extraction of natural gas from the Marcellus Shale deposits has mostly been posed as a yes or no option. What has been missing in these discussions, posturing and lobbying has been what might these funds, from these taxes be used for.
The pro development groups, like the Marcellus Shale Coalition, which represents the interests of the gas and oil industry would like to have no taxes. The environmental groups such as Penn Future would like to see these oil and gas companies, 'paying their fair share.' Governor Rendell and other politicians in power see this as a windfall to balance a state budget with huge shortfalls.
In an industry funded study, An Emerging Giant: Prospects and Economic Impacts for Developing Marcellus Shale, the economic benefits from the development of this industry are projected to be$400 million per year.
A study by the Department of Energy and Mineral Engineering at Penn State released two months ago estimated recoverable reserves of the Marcellus deposit to be at least 489 trillion cubic feet.
As reported by Pennsylvania Business Central, if 10 percent of that gas were recovered, it would be enough to fuel the entire U.S. demand for two years and have a wellhead value of about $1 trillion.
- In 2008, the gas industry in Pennsylvania generated $2.3 billion in total value added, created more than 29,000 jobs and generated $240 million in state and local taxes.
- With development in Marcellus increasing in spite of the halving of total active rigs in the U.S., this year the economic output is expected to top $3.8 billion, with tax revenues to exceed $400 million (possibly as hight as $600 million by 2014) and with more than 48,000 jobs created.
- By 2020, the industry will contribute a cumulative economic impact to the state of $265 billion along with nearly $15 billion in state and local revenue.
It is impossible to argue that jobs are not important with the state of the economy and in particular the economy of the counties that will most directly benefit from this development.
Clearly though, environmental issues are present, in particular clean water.
Penn Future and other environmental organizations call for responsible drilling. They call for taxes to be used to offset the impacts on local communities, to provide for enforcement and regulation of the drilling and its effects and to protect the natural resources of our Commonwealth. These are equally important.
Basically, I see this development as a possible way to begin to break our dependence upon oil, by replacing it with US based sources, natural gas. New jobs are obviously important. What is equally important is the preservation of clean water supplies. If you have a well for your source of water or even if you get your water from a municipal source, these municipal sources are often wells or reservoirs, which could be threatened by leaks and spills.
What I would like to see is a more robust debate about exactly what these taxes would be used for. With this amount of money coming into the General Fund or at the discretion of politicians in Harrisburg, they could be diverted for other uses. How exactly would these revenues flow to local communities? How much administrative overhead would this create in Harrisburg? How would these taxes be used to guarantee our clean water for decades to come?
Robert L. Sayre
Editor-in Chief, President