Pennsylvania is currently 15th among the states in natural gas production and promises to rise higher in the rankings, as gas in the Marcellus Shale is potentially worth as much as $1 trillion. Thirteen of the 14 higher- ranking states have a severance tax on natural gas (California has a "conservation tax" instead). But Pennsylvania, with all its budget woes, has yet to enact such a tax. State Representative Rick Mirabito says, "A severance tax is a tool for making sure the cost of extraction is fairly distributed. It does not make economic sense to not do it." And Mirabito is determined to ensure that the severance tax has the same kind of local revenue-sharing provision found in the casino gaming tax—he believes that money should come back to Williamsport and other local communities to deal with the social and economic costs associated with growth. Our own history in Pennsylvania with the coal companies should have taught us a lesson. The state never imposed any extraction fees on the coal companies when they were reaping huge profits in Pennsylvania, and now the state is left with insufficient funds to clean up over $1 billion in problems left by coal companies that are no longer in business. Some critics have claimed that a severance tax would over-tax natural gas companies in Pennsylvania. But unlike the property of other companies and industries, oil and gas wells are exempt from property tax. And many of the smaller gas companies are set up as LLCs, so they do not pay corporate net income tax. The bigger players clearly could afford to make a more substantial contribution to keeping Pennsylvania fiscally sound. One of these is Chesapeake Energy, owner of 1.8 million acres of the Marcellus Shale bed in Pennsylvania. Chesapeake Energy just increased its CEO's salary five times over, to $100 million, to reward him for gains that "very few companies realized in 2008." Another is Exxon, which just bought XTO Energy in order to become a player in the natural gas industry. Ultimately, of course, as in virtually every other industry, the additional costs almost certainly will be passed along to the consumers—those businesses and households up and down the East Coast that consume Pennsylvania's natural gas. And these are the people who should be paying the costs.

What's more, because transportation is such a large part of the cost of natural gas and Pennsylvania is closer to the East Coast than most of the other major producers, Pennsylvania gas will still have a competitive advantage. As of October 6, 2009, both State Representative Garth Everett and State Senator

Gene Yaw had told the Sun-Gazette that the issue of enacting a severance tax needed "further study." And Senator Yaw had expressed concern that some of the revenue from the tax might go to increase the budget

of agencies such as DEP—which is exactly where it should go if the environmental concerns addressed elsewhere in this issue are to be effectively monitored. Neither Everett nor Yaw responded to a request for comments for this article.



Sources: Interview with Rep. Mirabito, Sun-Gazette

of October 6, 2009, Patriot News of May 10, 2009,

WHYY News of December 15, 2009.