This isn't the time to hit the gas industry with new regulations

By Keith Mauck

When the House Environmental Resources and Energy Committee voted to stop new oil and gas regulations, it set the stage for a major standoff between the Pennsylvania legislature and Gov. Tom Wolf.

At issue are proposed changes to the Keystone State's rules governing drilling operations.

At least one Republican legislator has called the new rules "unlawful," while a Democrat says they are "long overdue."

 If they are enacted, they would tighten Pennsylvania's oversight of both conventional and unconventional oil and gas wells, and could violate existing law and a state Supreme Court ruling.

They also would raise the cost of producing Pennsylvania's shale energy resources, which is precisely the wrong thing to do when oil and natural gas prices are so low. Marcellus Shale natural gas is being sold for less than $1.50 per million Btu, which is one of the lowest price points in the country.

Rather than kick the oil and natural gas industry while it's down, Pa, should encourage its growth.

These historically low prices have hurt Pennsylvania's economy. Drilling companies that cannot make a profit have delayed projects and laid-off workers. 

Dozens of small drilling companies have filed for bankruptcy protection, and by the end of 2015 many large firms watched their stock prices collapse.

Early in 2016, energy analyst Fahel Gheit predicted "The second half of 2016 will be very unpleasant for many companies."

And it's not just the companies that are getting squeezed. Low energy prices also have reduced the royalty payments received by private mineral-rights owners who have leased their property to drillers.

Likewise, royalties paid to the state for leases in Pennsylvania's forests fell by 52 percent in the first half of the fiscal year. 

One would think the drop in revenues would ring alarm bells in the governor's mansion and perhaps dampen the urge to promulgate these new regulations. But that's not the case.

Wolf even attempted to pass a severance tax on the oil and natural gas industry again this year, even though he admitted it would generate far less in revenues than he estimated earlier.

Rather than kick the oil and natural gas industry while it's down, Wolf and Pennsylvania's Legislature should encourage its growth.

They should hold the line on stricter regulations and tax increases that raise drilling costs and make Pennsylvania a less competitive state for oil and gas development.

They should support the construction of new pipelines to carry Marcellus Shale gas to markets in the Northeast.

Furthermore, they should acknowledge that prosperity is a direct result of energy development.

And increasing prosperity is the key to Pennsylvania's future. Not only does greater wealth in the private sector provide more jobs and better opportunities for everyone, but also it generates the tax revenues that make environmental protection possible.

Poor countries without energy resources lack the funds to protect the environment.

As author Alex Epstein reminds us, "Fossil fuels have fueled the unprecedented industrial progress that doubled the human life expectancy and produced the cleanest, healthiest human environment in history."

Given Pennsylvania's economic realities, it makes no sense to impose new regulations or taxes on the drilling industry now.

These proposals are purely political ploys aimed at appeasing the governor's base and delivering on a campaign promise.

It's also important to remember who ultimately will pay the price for the governor's ill-conceived actions. It will be Pennsylvania's residents who will pay more for gasoline and natural gas, and who could be denied the opportunity to reap the benefits of the state's oil and natural gas production.

Link to original PennLive Article.

Keith Mauck is the founder of the sites GoMarcellusShale.com and GoHaynesvilleShale.com. He's a co-founder of ShaleCast.com.

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Permalink Reply by Keith Mauck (Site Publisher) on May 20, 2016 at 7:42am

READER'S COMMENTS / TALK ABOUT BEING OUT OF TOUCH!

These people will get in their cars, turn on their AC/Heat, take a hot shower, complain about their electric bills and it will never occur to them that the energy to achieve that came from PA  or somewhere like PA.

Rasilon 3 hours ago

I guess that means the "right" time to tax is after all the gas has been removed. No...that will push them out of the state. So the only thing left is to go beyond tax breaks and actually have the government pay the gas companies to operate wells because they create more jobs and prosperity than spending dollars on public welfare and the like, right???. I'm sure the writer can be brought around to agreeing with the concept of a tax. You just have to phrase it correctly, a negative tax rate. The more they pump, the more the state pays THEM.

Peter_Puck 6 hours ago
This isn't the time to hit the gas industry with new regulations: It's never a good time.  It wasn't a good time 5 years ago when the industry was booming either.  In reality the only good time is "as soon as possible" or whenever the legislators can get their act together, which happens to be right now.  Life will go on.
ac130uspooky 10 hours ago

Another gas advocate feeds us his BS!!!  Let's face it, we have a glut of natural gas being store under PA's mountains and hillsides because we don't know what else to do with it.  We have many drill sites closing because of this glut.  Until pipelines and shipment lines are built, we have no need for all this stored gas.  But none of this in anyway has improved the protections to the public of gas drilling, storage and transport.  No matter what issues the gas industry faces regarding expanding their markets, we PUT THE CART BEFORE THE HORSE in Pennsylvania.  Now it is time to catch up and regulate this industry in a way that benefits our citizen.  Let's quit making excuses why we should not appropriately regulate the natural gas industry.

tabascojoe 18 hours ago

I heat my house with wood.  Tax the crap out of them.

guys 19 hours ago

The current economic conditions in the Gas/Oil Industry is being used by the giants in this industry to buy out the smaller companies that do not have the reserves to weather this financial set back.  The Industry will not die, it will eventually be made up of fewer companies thus eliminating any competition that ever existed.  In the end profits will be greater for the industry but not for the land owners.

voiceofreasonpa19 hours ago

Just another corporate welfare advocate spinning their tune.

RichB-1 20 hours ago

It is never the time to Tax Gas when the prices are high, when the prices are low, when the prices are moderate, when the industry is booming, when the industry is failing, when drilling has just begun, when the wells are dry.  Oh and and when the well is completely dry, the companies take a tax credit on depletion and we pay them. 

Joseph Fatula 20 hours ago

Oh there's always time for a money grab. Why not a gasoline tax and an electric tax while we are at it?
All kidding aside, the real free riders are those in electric vehicles. They need to be slapped with a mileage tax. they use the roads, they need to pay up.

troutstamp 21 hours ago

Mr Mauck I would like to ask you one question. Would you agree to have a complete gas drilling pad on the property right next to where you live ? How about letting them use part of your property to access the well? You could get some gas revenue do to the lines running under your property and maybe something for the road to reach the well. How about it ? Are you willing to take one for the team ? 

esteem 21 hours ago

The PA General Assembly should add gas pipelines to the property that is taxed. In other states the gas companies pay local property tax on their pipelines. We should enact that tax in PA as well. It would mean tens of thousands into local public schools and county governments all across the Commonwealth.

steventodd 21 hours ago

Encourage its growth?  Are you nuts?  We have thousands of wells and hundreds of miles of pipelines currently permitted or underway.  How much more are we supposed to encourage the burning of dirty fossil fuels, when the same cash could be going into #CleanEnergy development?  I say no more.

Bravo to Tom Wolf for standing at least as strong as he has.  I wish he would do more to protect us, but cutting back on taxes and regulations which benefit we the people would help exactly no one…except perhaps a small sliver of 1% of us, again.

internet noise22 hours ago

"Poor countries without energy resources lack the funds to protect the environment."

Ah yes! Let's be more like them! 

When the drillers were going gang busters flooding the market and trying to cash in and reap the greed that fuels their souls, they cried then that increased regulations were a bad idea. 

Now they have flooded the market and helped crash prices, so the poor babies say it's a bad time for regulations now too.

Fish 23 hours ago

Lets see if I get it:  Companies drill baby drill until supply exceeds demand, now they are crying that low prices are hurting the industry.  Sounds like they shot themselves in the foot and we are supposed to help out by not expecting clean air and water?

FormerNewYorker2015 23 hours ago

"Rather than kick the oil and natural gas industry while it's down, Pa,should encourage its growth." Spoken by someone who thinks the general population is either stupid or blissfully ignorant.

guys 23 hours ago

Better late than never!  This is as good time as any to put this industry on notice, if they cannot afford to protect our environmental resources now, they never will be able to.

TSno23 hours ago
The correct time to have placed regulation on the gas industry was before they started to drill.
Yeah I knew that 1 day ago

While I have no problems with the proposed regulations, environmentally they will have very little impact.  So why dont we go after the biggest polluters of our waterways, the farming community?

Permalink Reply by Barry D on May 20, 2016 at 2:33pm

Keith,

The myth, the lie, promoted by the misinformation campaign of the anti fossil fuel crowd, is that the oil and gas industry is under-regulated or not regulated at all.

In fact, this industry is probably the most highly regulated industry in the country. The problem isn't the need for more regulation. The problem is that the federal government and states provide insuffucient funding to the agencies delegated the responsibility to enforce the regulations already in place.

I know many folks in Ohio that work for the ODNR, and they are overworked and stretched beyond reason.

If the leftists anti fossil fuel crowd truly wishes to deal with an issue, they will lobby their legislators to properly fund the appropriate agencies responsible for protecting our environment.

Instead, I suspect these folks will continue their misinformation campaign, because their true agenda is not the protection of the environment. The agenda is the elimination of the use of fossil fuels.

They are dangerous and anti American.

Permalink Reply by Kirby J Decker on May 21, 2016 at 11:42am

Agree , govt wants more of the mineral owners assets through more taxation , and or, regulation costs.

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