Full of Gas in Harrisburg

If there's one thing I've learned in my time in Pennsylvania, it's that you can rely on our State Legislators in Harrisburg to drag their feet. This is the same Legislature which in 2009 didn't pass its annual budget until almost 3 months after it was due.

Marcellus Shale (the huge rock formation containing huge amounts of hard-to-extract natural gas covering most of Western Pennsylvania) has been in the news for years. Companies have been ramping up operations to build wells and extract the lucrative gas since 2008. Now in the middle of a budget crisis in 2010 where our roads and public transportation options are facing severe cuts, the Legislators are finally proposing a tax on this process which is harmful to the environment and has already put billions of dollars in the pockets of investors.

Today, the State House is finally voting on a bill to tax the shale deposits. The only questions are: how much and how? Do you tax on the quantity of the gas as it is extracted from the ground or on the market value once the gas is sold or a combination of the two (as Governor Rendell supports). The current bill will only tax the gas as it is extracted, but it is set to be one of the highest rates in the nation. Of course, this is in front of the House. Once (and if) the bill reaches the Republican-controlled Senate, they will inevitably compromise and lower the rate and/or change the methodology.

Finally, once they can agree on the tax, they need to agree where the money should go - a combination of State general fund and an environmental fund to counteract the damages imposed by drilling.

Needless to say the drilling companies have predicted doom and gloom if the bill is passed in Pennsylvania. And Legislators are hesitant to pass a law so close to an important mid-term election. Will they pass the law before they leave for campaigning break in mid-October? I'll wager my bus fare because if they don't pass the law, I won't be taking the bus anymore anyways.

As a note, all other 24 Marcellus Shale states have already passed a tax. Pennsylvania is dead last.