Wednesday, April 13, 2011

Marcellus Works?

Now Republicans want taxpayers to foot the bill to drum up business for natural gas corporations?

There is an old expression that says "give somebody an inch and they'll take a mile." This expression basically sums up Pennsylvania's relationship with the Marcellus Shale industry.

Currently, the Commonwealth allows largely out-of-state natural gas producers to operate without a severance tax... like every other state in the union with natural gas levies (yep, Texas too).

Under the Marcellus Works plan, which the House GOP reintroduced last week, Republican leaders are asking Pennsylvanian taxpayers to foot the bill for the natural gas industry just a little more.

The 7-bill plan the House GOP is endorsing would incentivize the purchase of natural gas by pumping $47.5 million in tax dollars into tax credits, grants and loans for transit authorities, school districts and private businesses across the state to convert to natural gas for their vehicles.

Call me a capitalist, but shouldn't the market drive these kinds of conversions?

Some transportation administrators of smaller communities see flaws in the plan because they simply don't have the infrastructure in place to convert now. And natural gas fueled vehicles cost more than conventional ones, so fleets looking to make the switch have questions regarding how long it will take to recoup purchase costs.

The cost for compressed natural gas (CNG) used for natural gas vehicles varies widely. A rep from Chesapeake Energy Corp. (based in Oklahoma City, and the leading producer of natural gas here in Pennsylvania) said it goes for $1.39 a gallon in OK. However, others show it has been as high as $2.30 in PA.

But, I can see why Republicans are adamant about fueling the market here since an Inquirer article last week exposed that currently "drilling has outpaced the industry's ability to sell the gas." (PA's Natural Gas Rush, Philadelphia Inquirer, 4/3/2011)

Pennsylvania has already let the natural gas industry escape paying an extraction tax, costing the state about $173 million so far, and further reckless action on the part of drillers has caused toxic spills, explosions and tainted our drinking water. Now we're being asked to provide them a larger market in which to sell their product.

After some consideration, perhaps a more applicable expression for the Marcellus industry is that the House GOP is allowing them to "have their cake and eat it too."