Did a phone call telegraph the Wolf administration's real intent on shale gas?
Lots of eyebrows have been raised — and more than a few remain arched high among those in the commonwealth's shale gas industry — over a conference call this month set up by Deutsche Bank Markets Research and the Pennsylvania Department of Environmental Protection.
The March 4 call, hosted by the bank's Kristina Kazarian, and featuring state DEP Secretary John Quigley and his deputy, Scott Perry, covered what Ms. Kazarian billed as “the continued Marcellus-Utica build-out and specifically Pennsylvania's role here.”
No doubt, it was informative for anyone listening in. And, at least early on, Mr. Quigley did an even-handed job of billboarding Pennsylvania's energy charms. And an equally yeoman's job was done by both Quigley and Mr. Perry in running down the on-the-ground industry statistics and detailing the environmental regulatory regimen. For potential investors, it sounded like an honest brokering of Pennsylvania's shale gas and oil landscape.
Until it was not and the just-the-facts, ma'am, recitation turned political — not only a tacit discounting of the employment effects from the shale gas revolution but an open advocacy for an severance tax. One can only wonder how many potential investors crossed Pennsylvania off their list.
Shale-related employment “is probably about half a percent, if that, of total employment in Pennsylvania,” Quigley said. And the existing impact fee, which has generated something approaching $800 million in the past five years, was called “anemic,” producing a seemingly lamentable effective taxation rate on the industry of less than 1 percent to a highest estimate of 1.5 percent.
“We're leaving a lot of money on the table,” Quigley continued, the environmental protection guy shilling for a thorough plucking of the goose that lays the golden egg (but now far leaner because there's a glut of geese and a dearth of eggs).
Quigley called the fact that Pennsylvania doesn't have a severance tax “mind-blowing.” He pooh-poohed the suggestion that producers would go elsewhere should Gov. Tom Wolf's proposed 6.5 percent extraction tax win legislative approval.
That “really doesn't pass the reality test,” Quigley insisted. (Some producers still insist they'll do just that.) “(T)here is no excuse for Pennsylvania not to have a severance tax,” he reiterated.
To be fair, Quigley was asked by call host Kazarian to talk about the tax climate. And Quigley at least intimated that it would be more appropriate for the folks at the state Department of Community and Economic Development to address the severance tax and for the Department of Labor to talk jobs numbers.
Nonetheless, Quigley did talk about those topics — and with great specificity — and reasonable people could conclude, pejoratively. It's almost as if the benefits of the shale industry were being discounted to dissuade investment. That's certainly not the proper role for government. And it only reinforces the notion, for some, that the Wolf administration, in this conference call, telegraphed that it really wants to kill Pennsylvania's burgeoning shale fortunes.
Colin McNickle is Trib Total Media's director of editorial pages (412-320-7836 or email@example.com).