Business Association Leaders Discuss State of Natural Gas Industry
As prepared for delivery
Business Association Leaders Discuss State of Natural Gas Industry
Associated Petroleum Industries of Pennsylvania (API-PA)
Stephanie Catarino Wissman, Executive Director
Opening Statement, May 3, 2018
Good morning, everyone. I’m API-PA Executive Director Stephanie Catarino Wissman. Thank you for joining us today.
Governor Wolf’s latest proposal to raise taxes on Pennsylvania’s natural gas industry is as misguided as the others. The facts haven’t changed: Raising costs for one of the state’s major economic engines is bad economics. It’s bad for Pennsylvania employment, and bad for hundreds of local businesses in the natural gas supply chain including many that dot the landscape of Pennsylvania’s main street economy.
Pennsylvania is at the heart of the growing American energy renaissance of the past decade. Supporting well over 320,000 jobs, Pennsylvania’s oil and natural gas industry will only continue to grow with pro-growth energy policies, not punitive taxes and additional regulations promulgated from Harrisburg.
Pennsylvania is at a critical moment where it could turn to harmful, shortsighted policy decisions or seek higher ground with policies that continue to support and foster growth in the industry to the benefit of generations of Pennsylvanians to come. Strong industry activity has meant more than $44 billion dollars in economic activity, boosting manufacturing, logistics, banking and construction among dozens of other economic sectors. Imagine if we took as much time to support a pro-growth natural gas policy as we have to debate and discuss the failed concept of a punitive severance tax. The results of that change in thinking could be game changing for Pennsylvania. And yet, for the second time this year alone, the Governor has released another tired and misguided tax proposal. It should be clear, targeting a productive industry for higher, duplicative taxes is bad economic policy, bad for Pennsylvania and bad for Pennsylvanians.
As we look away from bad policy proposals and onto real life impacts that the natural gas industry has had and will continue to have on Pennsylvanians, you only need to look as far as the family budget. On top of benefits natural gas production is already delivering to the commonwealth, there are benefits to kitchen table money discussions and the family bottom-line. Between 2009 and 2017, as Pennsylvania’s natural gas production grew, natural gas prices fell, and family incomes rose – and this relationship has become indelible in terms of the amounts as well as its annual growth. Higher family incomes and lower prices as a result of the natural gas industry’s contributions to Pennsylvania’s economy make for an important combination that is worth protecting.
If you think Pennsylvania’s natural gas economy won’t be impacted by tax hikes, I’d advise you to review the facts. Due to a number of factors (depth, geology and existing state taxes and regulatory policies to name a few) the cost to drill a shale well in Pennsylvania is already among the highest among natural-gas producing states. At $368 per foot, our drilling costs are lower than those in Ohio and Oklahoma, but higher than New Mexico, Texas and Colorado. Unlike many other states, Pennsylvania mainly produces dry gas, with minimal liquid content, so the value proposition hinges critically on cost competitiveness. We may be in the middle of the pack in costs, but now we’re at the dead bottom of the list among that same group of states when it comes to adding new rigs from 2016 to 2017. Piling on new costs is not the way to change that for the better.
While Governor Wolf and some others fail to recognize it, Pennsylvania’s natural gas industry already pays its fair share in taxes, paying an estimated $219 million in impact taxes this year – that’s up $46 million over last year. Raising taxes further could force producers to cut back, jeopardizing a reliable source of funds for roads, bridges and other critical community needs.
Instead of looking for ways to raise costs for one of Pennsylvania’s most dependable job-creating sectors – jeopardizing investment in all 67 counties – state officials should prioritize pro-energy policies such as building out more energy infrastructure to help Pennsylvania consumers, workers and the environment continue to benefit from our state’s vast natural gas resources and bring more natural gas access to the people of Pennsylvania. To truly attain the benefits of an energy economy, additional pipeline infrastructure is needed – sharing more clean-burning natural gas and continuing to substantially cut greenhouse gas emissions for Pennsylvania while providing the reliable and affordable power all of America needs.
Pennsylvania’s economic record of the past decade proves that pro-energy is pro-employment, pro-economic growth, pro-community and pro-revenue. Governor Wolf’s tired insistence on raising taxes on the natural gas industry is none of those things. This tax proposal is a bad deal for Pennsylvanians, and the legislature should reject it and move on to real solutions.
Now I’d like to turn things over to…