October 27, 2011

Politician, heal thyself on Marcellus shale





Everett Dembosky

By Everett Dembosky


In view of the 99% protests going on in the country, I was encouraged to hear state Rep. David Reed say early in his Oct. 13 town hall meeting in Clymer, Pa., that there are two things he wants to end in Pennsylvania:  corporate greed and tax loopholes.


My hopes were dashed when he addressed drilling for natural gas in the Marcellus shale: "I favor the impact fee [instead of a severance tax] because it goes directly to the areas where the drilling is going on," Reed said. "Why should Philadelphians benefit from drilling that's not happening in their backyards?" 

I pointed out that Pennsylvania is one of two states who do not tax the billions made by these big corporations.  I also complained that Pennsylvania's natural resources are being exported out of the state, while the money is being exported to Texas.


I suggested the tax could address damage to the infrastructure and environment, which Reed admitted concerned him, and also contribute revenue benefiting all of Pennsylvania; making it unnecessary to cut both education and programs for the poor. 


Reed said he remains in favor an impact fee over a severance tax.  It remains to be seen what this impact fee will be, but just one well in Northern Pennsylvania is estimated to bring in $43.8 million in one year!  Drilling companies expect a 60 percent return per well, without taking tax breaks into consideration, according to the Pennsylvania Budget and Policy Center.


The proposed severance tax which Reed voted against would have put 40 percent of the revenue collected into the general fund and 60 percent into areas most affected by drilling.  The "exorbitant tax" Reed spoke of on his website would have been 10 percent, or 39 cents per 1,000 cubic feet of gas extracted. However, according to the budget-and-policy center, Pennsylvania's ultimate tax would have been 7.3 percent after taking into account tax breaks and the lack of a property-assessment tax on drillers in Pennsylvania.


Wyoming taxes Marcellus gas at 10.2 percent; New Mexico, at 8.4 percent, Montana, at 7.9 percent.  The states mentioned here all have a corporate tax in addition to the severance tax on drillers.  Texas, however, does not have a corporate tax; hence, they are not going to move their headquarters to Pennsylvania.  


Is Marcellus Shale a great boon for our area?  Consider this: When Marcellus drillers came to Pennsylvania, the drilling of shallow-wells by local companies all but ended.  The jobs lost in shallow-well drilling shifted to Marcellus drilling. In other words, the 48,000-jobs-boast by Marcellus drillers is not new jobs, for the most part.  They replaced the jobs lost when a slowdown in the economy and the Marcellus gas glut made local drilling companies unable to compete.


If Marcellus drilling is such a godsend to Pennsylvania, why does that industry make such huge donations to our politicians?  I would assume that our representatives would vote to support gas and oil without huge campaign contributions.  Marcellus jobs are indeed needed and appreciated, but that's not the issue.  The issue is taxation of Marcellus gas' lucrative profits.


When I mentioned Gov. Corbett's $1 million campaign contributions from drilling companies, Reed countered: "Rendell took $5 million from teachers unions."  Even if this were true, which it is not (the Pennsylvania State Education Association contributed $500,000 to Rendell's last election.)  Teachers' unions create more jobs than gas companies. And they don't ship their product out of state. 


In a town hall setting, I refrained from mentioning that Reed himself accepted $57,042 from the gas/oil industry, the highest amount accepted by any other candidate for the state legislature, while Don White came in second with $47,975, according to MarcellusMoney.org. In fact, 84 percent of all gas and oil contributions go to Republican candidates. ("Deep Drilling, Deep Pockets," Common Cause, May 11, 2010).  What about other Republican candidates presently running for office in Indiana County?  Ask them. 


I am not suggesting that Dave Reed is a corrupt, bought-and-paid-for politician.  If he were, he'd have bargained for more than that.  But I am suggesting that these facts don't jibe with his stated wish to end corporate greed in Pennsylvania.


To Rep. Reed --  whom I believe is a good man caught up in a bad system that allows special interests to control what is supposed to be a representative democracy --  and to others like him,  I say, as I see it, if you are really against corporate-greed, "Politician, heal thyself."

Everett Dembosky is a retired math teacher, high school administrator and businessman. He is a lifelong Indiana County resident. He enjoys traveling in the United States and abroad with his wife, Janice. They live in South Mahoning Township.

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Did Reed say anything about the "model ordinance" provision under discussion that would prevent Indiana County from protecting it's natural areas?

The model ordinance issue wasn't brought up at this meeting. Perhaps you could write an article about this issue. You're the knowledgeable one on this aspect of Marcellus shale. I'd be interested in learning more about this.

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About this Entry

This page contains a single entry by Ms. Lee C. Vest published on October 27, 2011 8:11 AM.

Photo essay: Demonstration at IUP's Eberly College of Business was the previous entry in this blog.

The HawkEar -- Feb. 2, 2012 is the next entry in this blog.

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