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.
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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Replies to This Discussion
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Permalink Reply by Keith Mauck (Site Publisher) on
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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.
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Permalink Reply by Barry D on
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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.
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Permalink Reply by Kirby J Decker on
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Agree , govt wants more of the mineral owners assets through more taxation , and or, regulation costs.
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