Apocalypse Not: Study Finds Severance Tax Unlikely to Scare Away Drillers from Marcellus Shale

By Parth Vaishnav (left) & Nathaniel Horner (right) of Carnegie Mellon University

Parth VaishnavNathaniel HornerA common argument against enacting a severance tax on shale gas in Pennsylvania is that the additional cost will cause the industry to leave the state. As graduate students in the Department of Engineering and Public Policy at Carnegie Mellon University, we decided to test that idea.

We found that replacing the state's current drilling impact fee with a 5% severance tax would be very unlikely to inhibit new drilling. Our study looks at what such a tax would mean on a driller's internal rate of return (IRR) and how that would influence drilling decisions. What we find is that while a severance tax would decrease a well's IRR, as does the impact fee, the decrease is rather small — making wells still quite profitable for drillers.

Pa.'s Shale Fee Very Low Compared to Other States

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Pennsylvania's fee on Marcellus Shale gas wells is the lowest among 11 states examined by the Independent Fiscal Office in a new study out last week.

As PBPC Research Director Michael Wood told The Philadelphia Inquirer, "this report highlights what we've said for a while: The impact fee is low compared to other states."

Read the Inquirer story for more.

Why a Minimum-wage Increase Would Help Families in Pennsylvania

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When you restrict your view to just parents affected by an increase in the minimum wage to $10.10 per hour, the average low-wage parent is responsible for just over half (51%) of her family's income.

Some Major Corporations Pay Little or Nothing in State Income Taxes

What do Pennsylvania-based companies PPL, H.J. Heinz, Airgas, Allegheny Technologies, Hershey, and Comcast have in common? They each pay little or nothing in state income taxes, according to a new report from the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ).

Commentary: A Unified Tax Policy for Marcellus Drilling in Ohio, Pa., and W.Va.

On Tuesday, The Pittsburgh Post-Gazette published an op-ed that i co-wrote with Wendy Patton of Ohio Policy Matters and Ted Boettner of the West Virginia Center on Budget & Policy making the case for a unified approach to taxing shale drilling across our three states. Check it out:

Pennsylvania, Ohio, and West Virginia share a lot in common, including job markets, highways, rolling hills, watersheds and natural resources. In some places, shale wells in close proximity to each other are in different states.

Yet each of our three states has taken a vastly different approach to taxing oil and gas drilling.

More Minimum Wage Momentum in WV and MD. Is PA Next?

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An alliance of religious, labor, community, and women’s groups will kick off a campaign this afternoon to raise the minimum wage in Pennsylvania to at least $10.10 per hour. 

Raising the minimum wage has already gained momentum nationally and is likely to be a defining issue in Pennsylvania's gubernatorial election this year. It's also a policy issue where Pennsylvania is lagging well behind our neighboring states.

Education Advocates Make a Case for Philly School Funding

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Sharon Ward, PA Budget and Policy CenterA coalition of education advocates joined forces to call on Philadelphia City Council to provide $195 million in sustainable local funding to the city's school district next year.

At an event last Thursday when Council met, several speakers explained how much students have suffered from budget cuts in recent years and how city leaders must step up once again to provide needed funding for city schools.

“Philadelphia students, teachers, and staff cannot go through another year of upheaval and uncertainty,” said Sharon Ward of the Pennsylvania Budget and Policy Center, one of the advocates to participate Thursday.

Makers of the U.S. Unite: The UAW Vote at VW One More Time

There are three central challenges facing U.S. manufacturing today: wages are too low, employers invest too little in their workers, and the sector lacks meaningful credentials or job-matching institutions allowing dislocated workers to find new manufacturing jobs that capitalize on their skills.

Understanding the Union Vote at VW in Tennessee

As you probably know, the United Auto Workers (UAW) lost a union election at a Chattanooga Volkswagen plant last month by a vote of 712 to 646 (53% to 47%). My heart goes out to the workers and UAW leaders who put heart and soul into achieving a different result.

I was taken aback by the vote, I have to admit. So it has taken me a couple of weeks to process it.

Taking a Common Approach to Shale Taxation in OH, PA, WV

Although their state capitals are separated by hundreds of miles, Pennsylvania, Ohio, and West Virginia are home to Marcellus Shale gas fields that in some cases are separated by only a few miles.

From that vantage point, advocates from the three states said it would make sense for Pennsylvania, Ohio, and West Virginia to take a common approach to taxing shale gas and oil drilling.

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