The Marcellus Shale Play is a black shale formation lying under the Appalachian Basin running from Tennessee to New York. The U.S. Energy Information Agency (EIA) estimates that 1,953 billion cubic feet of recoverable reserves lie beneath the shale sediment. (U.S. Energy Information Administration, 2012) The EIA estimates that shale basins in the United States have a potential to produce from 500-1,000 trillion cubic feet of natural gas (U.S. Energy Information Administration, 2012). Natural Gas production has risen so dramatically that the U.S. imports fell to just 4% of its energy consumption. The U.S. imported 16% in 2012 and 30% in 2005 (U.S. Energy Infomation Administration, 2014).
Until 2008 the Marcellus Shale Play was deemed unrecoverable. Advances in technology, namely hydraulic fracturing, or “fracking,” and increased demand, have made the Marcellus Shale Play a viable economic opportunity. In 2007, energy exploration companies began establishing a presence in the region and leasing mineral rights from property owners. We will use data from 2000, the immediately preceding census. 2008, the first full year of Marcellus Shale activity and 2013, the last full year of data available for the purposes of this benefit-cost Five counties in Northeastern Pennsylvania; Bradford, Susquehanna, Wyoming, Tioga and Sullivan are considered “core” counties, located at the epicenter of drilling activity. For the purposes of this study we will focus on the following three core counties; Bradford, Susquehanna and Wyoming and contrast them with “ancillary” counties; Lackawanna, Luzerne and Wayne. These six counties are traditionally referred to as “Northeastern Pennsylvania.” The Commonwealth of Pennsylvania currently assesses an “impact fee”. The impact fee is a flat fee of $50,000 for each new well drilled, and a percentage of the amount produced and the current indexed price of the gas. 60% of the fees paid remain at the municipalities that host the development. The remaining funds are distributed between various state agencies that regulate drilling and the Marcellus Legacy Fund. The Legacy fund provides funding for environmental and infrastructure projects statewide. (OIL (Pennsylvania Department of Revenue - Tax Compendium, 2014) Critics of the Impact Fee contend that the State of Pennsylvania is far too generous with the Marcellus Shale Industry and should levee a “severance tax.” Earlier this year, PA Senate Democrats proposed a bill introducing a 5% severance tax. (State Senator John Yudichak - Newsroom, 2014) Proponents of the bill contend that $720 million will be generated next year and $1.4 billion annually from a 5% tax. Every other state with heavy drilling activity; Texas, Ohio, Oklahoma and West Virginia, impose a severance tax. Opponents of the severance tax believe the state would no longer be as attractive with such a tax levied and activity, and jobs would diminish. (MSC Statement on Pa. Shale Development, 2013) By 2011, after the 3rd full year of drilling activity, the core counties in Northeastern Pennsylvania had already begun to recognize the economic impact. Counties can best measure economic activity by the volume of sales tax collected on all goods except food and clothing. The change in sales tax collection was up by 28.5% compared to negative .93 in the ancillary counties. In Bradford County, the epicenter of the Marcellus Shale Play, collections were up over 50% for the 3rd year in a row. …show more content…
In 2006 Pennsylvania approved casino licenses with the intention to tax the proceeds at 55%, far above the industry average of 8%. Critics harpooned the heavy-handed approach and claimed the entire industry would collapse after the novelty was gone and the low tax Mecca of Atlantic City would reassert it’s dominate position. The State Senate believed a viable gambling market existed in the state and casinos would be apt to service them, even at 55%. The application process, while not entirely transparent, was extremely competitive. Even in a highly taxed and regulated environment, the gaming industry recognized an opportunity and seized it in 2006. In 2011, Pennsylvania took in $1.5 billion in tax revenue, ahead of 2nd place Nevada with $865 million. Atlantic City, fighting for its very survival, took in just $265 million. Almost 8 years later the health of the Pennsylvania Gaming Industry is thriving, even with a relatively less attractive tax
Until 2008 the Marcellus Shale Play was deemed unrecoverable. Advances in technology, namely hydraulic fracturing, or “fracking,” and increased demand, have made the Marcellus Shale Play a viable economic opportunity. In 2007, energy exploration companies began establishing a presence in the region and leasing mineral rights from property owners. We will use data from 2000, the immediately preceding census. 2008, the first full year of Marcellus Shale activity and 2013, the last full year of data available for the purposes of this benefit-cost Five counties in Northeastern Pennsylvania; Bradford, Susquehanna, Wyoming, Tioga and Sullivan are considered “core” counties, located at the epicenter of drilling activity. For the purposes of this study we will focus on the following three core counties; Bradford, Susquehanna and Wyoming and contrast them with “ancillary” counties; Lackawanna, Luzerne and Wayne. These six counties are traditionally referred to as “Northeastern Pennsylvania.” The Commonwealth of Pennsylvania currently assesses an “impact fee”. The impact fee is a flat fee of $50,000 for each new well drilled, and a percentage of the amount produced and the current indexed price of the gas. 60% of the fees paid remain at the municipalities that host the development. The remaining funds are distributed between various state agencies that regulate drilling and the Marcellus Legacy Fund. The Legacy fund provides funding for environmental and infrastructure projects statewide. (OIL (Pennsylvania Department of Revenue - Tax Compendium, 2014) Critics of the Impact Fee contend that the State of Pennsylvania is far too generous with the Marcellus Shale Industry and should levee a “severance tax.” Earlier this year, PA Senate Democrats proposed a bill introducing a 5% severance tax. (State Senator John Yudichak - Newsroom, 2014) Proponents of the bill contend that $720 million will be generated next year and $1.4 billion annually from a 5% tax. Every other state with heavy drilling activity; Texas, Ohio, Oklahoma and West Virginia, impose a severance tax. Opponents of the severance tax believe the state would no longer be as attractive with such a tax levied and activity, and jobs would diminish. (MSC Statement on Pa. Shale Development, 2013) By 2011, after the 3rd full year of drilling activity, the core counties in Northeastern Pennsylvania had already begun to recognize the economic impact. Counties can best measure economic activity by the volume of sales tax collected on all goods except food and clothing. The change in sales tax collection was up by 28.5% compared to negative .93 in the ancillary counties. In Bradford County, the epicenter of the Marcellus Shale Play, collections were up over 50% for the 3rd year in a row. …show more content…
In 2006 Pennsylvania approved casino licenses with the intention to tax the proceeds at 55%, far above the industry average of 8%. Critics harpooned the heavy-handed approach and claimed the entire industry would collapse after the novelty was gone and the low tax Mecca of Atlantic City would reassert it’s dominate position. The State Senate believed a viable gambling market existed in the state and casinos would be apt to service them, even at 55%. The application process, while not entirely transparent, was extremely competitive. Even in a highly taxed and regulated environment, the gaming industry recognized an opportunity and seized it in 2006. In 2011, Pennsylvania took in $1.5 billion in tax revenue, ahead of 2nd place Nevada with $865 million. Atlantic City, fighting for its very survival, took in just $265 million. Almost 8 years later the health of the Pennsylvania Gaming Industry is thriving, even with a relatively less attractive tax