Pennsylvania

Energy. Environment. Economy.

Gas industry nervously awaits outcome of governor’s race

Marcellus Shale Coalition President David Spigelmyer

Marie Cusick/ StateImpact Pennsylvania

"If there's a change-- and the electorate will determine that-- we'll work with Governor Wolf," says David Spigelmyer, president of the gas industry trade group, the Marcellus Shale Coalition."But today our administration is a Corbett administration, and we've worked hard to make sure we have rigor to our rules in Pennsylvania."

When members of Pennsylvania’s largest gas industry trade group got together for their annual conference last week they were a bit worried.

Why?

Anyone paying attention to voter polls or listening to the rhetoric coming out of Harrisburg knows there is the very real possibility of two major changes for the gas industry— a new Democrat in the governor’s mansion and a new tax on gas production.

The elephant in the room

It’s not surprising to see famous names on the list of scheduled speakers for the Shale Insight conference. Last year Newt Gingrich made an appearance. This year the Marcellus Shale Coalition booked conservative Fox News host Sean Hannity.

It was his job to warm up the crowd of several hundred business people over lunch at Pittsburgh’s David L. Lawrence Convention Center.

“How many of you are conservative here?” Hannity asked the audience. “Just a show of hands.”

A lot of hands shot up.

“Alright. How many are liberal? Here little liberal, liberal, liberal,” he teased. “There’s always one.”

About half a dozen hands went up. He pointed to a woman.

“What’s your name?” he asked. She said Tara.

“Tara!” he shouted. “Everybody say hi to Tara the liberal!”

Hannity wasn’t the first speaker to make jokes about the lopsided political representation at the conference. Former New Mexico governor, U.S. energy secretary, and one time Democratic candidate for President Bill Richardson promised the crowd earlier that day he wouldn’t be too partisan in his speech.

“I know the only Democrats in here are myself and that guy back there in the kitchen,” he laughed. “So don’t worry!”

But all joking aside, there was a palpable sense of concern among this pro-business, conservative crowd.  With election day just a few weeks away, Governor Corbett’s Democratic challenger Tom Wolf has a wide lead in the polls, and he’s made a campaign pledge to enact a new tax on gas production.

“We pay our fair share”

Jim Tramuto is the vice president of government and regulatory strategies for Southwestern Energy. He says the current tax system is working.

Governor Corbett signed it into law in 2012. It requires gas companies to pay an impact fee for each well they drill. So far it’s brought in about $210 million per year. Most of the money stays with the communities where drilling occurs.

York County businessman Tom Wolf wants to enact a new five percent tax on gas production, which he says he’d use to fund education. Tramuto doesn’t think that’s a good idea.

“We pay our fair share,” he says. “I think it’d be a mistake to look to our industry as the only funding source for all programs at the state level.”

A recent survey shows a majority of Pennsylvanians support the drilling industry, but most also want to see a tax on gas production. Pennsylvania is the largest gas-producing state without one.

Even some Republican leaders think the tax is inevitable.

Former Governor Tom Ridge told the conference crowd he expects it will happen after the election, and the state senate’s top Republican leader, Dominic Pileggi (R- Delaware) was recently quoted saying it’s coming sooner or later.

All this has prompted the gas industry to fight back in a new TV, radio, and print ad campaign. The commercials were unveiled the first day of the conference. The industry is attempting to reclaim the word “fracking” from environmental opponents who have tried to give it a negative connotation.

Marcellus Shale Coalition President David Spigelmyer says the campaign also reminds people natural gas companies have created jobs and generated revenue for the state.

“Certainly the election season has heightened this issue,” he says. “So we felt necessary as a board of directors of the MSC that we needed to set the record straight.”

“I want them to stay”

The gas industry isn’t alone in its concern over potential changes to state tax policy.

Shirl Barnhart is a Democratic supervisor for Morgan Township, in Greene County. He’s also first vice president for the state Association of Township Supervisors. He says when the gas boom first began, it felt like his community was invaded. Later, drillers threatened to leave over the notion of paying the impact fee.

“At that time I said, ‘I’ll help you pack.’ But now that the impact fee’s in, they’re giving back to the community. I want them to stay.”

Barnhart’s worried if Wolf is elected, his community could lose that money.

“I’m not a big fan of Tom Corbett to start with, but Tom Wolf really scares me.”

He’s still not sure who he’ll vote for.

“I’m still up in the air,” he says. “But I’m not leaning toward Tom Wolf right now, I’ll tell you that.”  

Wolf didn’t get a chance to explain his ideas at this year’s conference, because he wasn’t invited. The Marcellus Shale Coalition says its policy is to invite the sitting governor. The two-day event ended with a chat between Governor Corbett and Marcellus Shale Coalition president David Spigelmyer. He thanked the governor for his support of the industry and wished him good luck with the election.

It will be up to voters next month to decide who gets an invitation to next year’s conference.

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