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New Report Calls For Severance Tax On Natural Gas Production

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 By Tom JosephContact
May 28, 2009

Harrisburg, PA – A new report from the Pennsylvania Budget and Policy Center says a tax on natural gas extraction in Pennsylvania's Marcellus Shale would help with clean-up now, and in the future, when the drilling has stopped. Research director for the center, Mike Wood, says some of the money, to be paid by companies doing the drilling, could be used to mitigate the environmental impact from natural gas production.

"Other states have severance taxes, and those taxes haven't stopped companies from developing and extracting the natural resources there. I don't think there's anything special about Pennsylvania where it would be different."

One of the major issues, says Wood, is the large amount of waste water generated when companies extract natural gas from the ground.

"There are a number of water treatment plants that are going to be needed to be able to process the waste water from these types of projects, and right now, regular tax dollars are being used to subsidize these."

Proceeds from the severance tax could also serve as an insurance policy to handle some of the unknown consequences of natural gas drilling, he adds.

"You don't really know what the environmental impacts of some of these things are going to be until well after the fact, and that's one of the reasons why the severance tax is important. It can help the state pay for programs to remediate these problems."

Pennsylvania's oil and gas industry says such a tax could make Pennsylvania less-competitive with states that don't have one. The Marcellus Shale has huge potential for the industry since it sits underneath 54 of Pennsylvania's 67 counties.

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