Energy. Environment. Economy.

Corbett says taxing natural gas may be a future option

Governor Corbett discussing his budget proposal on witf's Smart Talk Friday.

Heather Woolridge/ witf

Governor Corbett speaking at WITF.

Governor Tom Corbett says he’s thinks taxing natural gas could be an option. Just three weeks before the election, the governor is battling for his political future. In an exclusive interview with StateImpact Pennsylvania, Corbett said he thinks rather than the extraction tax advocated by his Democratic opponent Tom Wolf, it may be better to tax the transport of the gas within the state.

“Maybe the tax instead of being at the wellhead, should be in the transmission line,” said Corbett. “Now we can probably only tax it in the transmission line that is intrastate because if it goes into interstate, that is a Washington issue.”

Back in 2012 Governor Corbett enacted the impact fee, which charges Marcellus Shale gas drillers $50,000 per well.  Critics, including his Democratic opponent Tom Wolf, say that method leaves a lot of money on the table. Pennsylvania is the only major gas producing state without a severance tax, which taxes the value of the gas extracted. Wolf has proposed a five percent severance tax. Corbett continues to oppose this kind of tax for now, saying it would cut too much into the drillers bottom line, causing them to move out of state. But he’s no longer calling it “un-American.” Instead, he says once the vast majority of the wells are drilled, it may be time to enact a tax.

“If this industry was 10-15 years old already, I think we’d be having a different conversation,” said Corbett.

Corbett gave no details of what a transmission gas tax would mean. But pipelines that cross state lines are regulated by the federal government, so the state would be limited to the transmission lines within Pennsylvania. Pipeline companies may be an easy taxation target because they already benefit from tax breaks. Natural gas transmission companies are exempt from both federal corporate income tax and Pennsylvania’s gross receipts tax.

Corbett says Pennsylvania’s 10 percent corporate income tax makes up for the comparatively lower revenue generated by the impact fee. But it’s a difficult calculation to assess. Texas, the largest producer of natural gas, charges a 7.5 percent tax on the market value of the gas. But the state doesn’t have a corporate income tax. When Corbett talks about tax revenue generated by the industry, he casts a wide net by including the local businesses that serve the shale gas boom. Many Marcellus Shale drillers are registered out of state, and its unclear how much corporate tax they end up paying. Corbett told StateImpact that his administration has not done an analysis of what the Marcellus Shale drillers have paid in corporate income tax.

But he says the key issue is keeping drill rigs in Pennsylvania and getting the wells drilled while costs are still competitive with other states. He points to recent moves by big oil producing states like Alaska, to cut their severance taxes. The impact fee Corbett backed three years ago has brought in $630 million dollars.


  • Jack Wolf

    We don’t need a tax. We need a ban. A tax only allows a state to become dependent on the revenues. And a tax will never, ever match the cost of climate change which includes millions of lost lives every year (Source: WHO).

  • KnightBiologist

    Will the “impact fee” cover the cost to the health of future generations as their water is permanently poisoned? Will these same companies guarantee a clean water supply as climate chaos ensues in large part due to the leaking methane they are dumping in our atmosphere? No, of course not. Go solar and green renewables asap Pennsylvania. Your children don’t deserve this legacy. Signed, a friendly climate marcher.

  • JimBarth

    Shale wells have an incredibly high depletion rate, with most of the shale gas gone within the first three years. When Corbett picks a time frame of 15 years, the 6,000 or so shale gas wells already drilled will be dry, the “sweet spots” will be sour, and with Corbett, PA will have gotten exceptionally little. Corbett privatized the profits, and will externalize the costs, laying it on the feet of the PA taxpayer, as the industry will have caused, perhaps irreparable harm, to the environment, and will have terribly impacted the health of citizens in the extraction zones. Then there is the big picture, climate change impacts due to fossil fuel burning, which I’ll just mention, because I don’t have a lot of hope given the nature of humans, and governments.
    Corbett smells defeat, and perhaps he hopes that by (three weeks before the election) mentioning tax as a possible “future option”, he’ll seem pragmatic and flexible? He is a shale gas extraction lackey, and he will always be one. Say goodnight Governor Corbett. I hope the door hits you on the way out.

    • dave

      My grandparents have a well in there back yard that has been pumping away for 60 years. The marcellus gas will out last us, plus under it is the giant utica shale. If we over tax the drillers they will move west and and stop developing the wells and pipe lines.

      • JimBarth

        If your grandparents have a 60 year well, it is not a shale gas well, and those will not be “pumping away for 60 years”. It will be more on the order of less than 5-10 years, even if they come back to frac it again. You may be fine with “drill baby drill” in your soon to be rural residential turned to industrial wasteland, I’m not. Yes, if the Utica is profitable, they will drill, as allowed, but, the industry needs to drill new well after new well after new well in order to keep their gas extraction volume even at current levels. This translates into a massive amount of wells in rural residential areas, Penns public woods, along with distribution lines, compressor stations and pipelines and so forth. As far as “over taxing” the drillers, leave that dead horse to rest in peace. If they move “west”, good riddance.

  • Patrick Henderson

    As has been shared with StateImpact repeatedly in the past, Texas does NOT levy a 7.5% severance tax. Rather, the tax is reduced by between 50% and 100% for high-cost shale wells, meaning that the typical shale gas well in Texas pays between 0% and 3.75% for its first 10 years of production. It is unfortunate that StateImpact does not provide fair context of Texas’ tax rate, particularly when its use is intended to draw a contrast as to the competitiveness between the two states, and when this fact has been laid out in detail to StateImpact and its editors. As for externalizing the costs, that argument simply makes no sense. The definition of the impact fee is to provide a direct revenue source to where those costs are being incurred (this is in addition to the well-bonding increases contained in Act 13 of 2012). The equation is simple: for the three years prior to Governor Corbett, no comprehensive statutory environmental protections for shale activity were enacted, and no additional new revenue was generated from shale gas activity. Thanks to Governor Corbett, PA’s environmental protection laws are second to none, and Pennsylvania communities are benefiting from $630 million in new revenue. Pennsylvania remains the only major gas-producing state in the nation to levy an impact fee.

    Patrick Henderson, Energy Executive
    Office of the Governor

    • Roscoe McCloskey

      Patrick, your shill colors are showing. please tell us more about what Texas does, because it matters to absolutely no one in PA. We want protection! What we got was sold down the river to an industry that you and your boss will be working for within the next six months. Can you tell me that you have not secured a job within the gas industry after Corbett loses? Don’t bother, I won’t believe you even if you tell me no. Act 13 was not protection, it was unconstitutional. It also does include a great deal of environmental protection, but it is not nearly enough, and you should know it, but you don’t, you are blinded by the money, or the success you want attributed to you, whatever causes you to do harm to PA like you do. If Corbett were serious about this he would have provided the money for enforcement of these laws and not cut the funding and made them dependent on the very industry they are tasked to regulate. Conflict of interest much? But then why would that bother you, right? I will address another of your statements, the one about externalizing the costs and internalizing the profits. You claim this doesn’t makes sense, but I propose you are being simple, or just disingenuous. We, the people of PA, mostly those of us from the North or the West, have to deal with the “costs” of this industry. We deal with the traffic, the poisons, the environmental damage, the loss of our sense of place, the loss of the beauty we once called nature and much more. That is real and uncompensated loss. Tell me how this is nonsense? And last, you claim big numbers like 630 million in new revenue. What would it have been had Corbett actually taxed them? Two times that number? Three times? It would have been much more. We have lost the opportunity thanks to Corbett, He has given away something we can never get back. He will go down in history as the worst governor of PA and we may never recover from the damage he has caused.

      • kenneth weir

        great rebuttal to the Marcellus shill in “little Tommy Corbetts” house of liars. Socializing the costs and privatizing the profits, that is what they are about.

      • JimBarth

        It’s odd to come back to this thread on February 1, 2015, but as we all know now, Patrick Henderson went to work for the Marcellus Shale Coalition within one week after Corbett left office, and he left his government job. We all knew this would happen. I just wish they would all move to Texas, where the “glove fits”.


    a hail-mary shot
    where was corbett’s anti-gas rhetoric when the drillers were pushing dark money into his campaign

  • MrPittsburgh

    ‘One Term Tommy’ and another flip-flop. Remember when he told everyone he was only going to be a one-term governor? Let’s help him with that in 3 weeks!

  • Julieann Wozniak

    The man lies, but I’m used to that. What’s he gonna do about the destruction and deleterious health effects his fracking owners have caused to us in Greene County? I live in Bobtown, home of Chevron’s exploding gas well.

  • DeanMarshall

    This is a ploy to garner a few more votes, And a ploy to help the gas drillers fleece Pa even more! Taxes on “Intrastate” lines will be passed on to every customer in Pa and deducted as an “expense” from all royalty checks to leased landowners! Tricky Tom is a Criminal Conspirator put in the Governors office by the Gassers and he continues to benefit Them….. NOT the citizens of this state!

  • kenneth weir

    Socializing the costs while privatizing the profits. What a great way for Corbett and his corporate handlers to fill their pockets.

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