HOW MUCH WILL GOVERNOR RENDELL’S PROPOSED SEVERANCE TAX COST PENNSYLVANIANS?
• Pennsylvania’s natural gas reserves, while large and close to destination markets, only remain attractive investments if costs are carefully controlled and expenses minimized. • The market price of natural gas has fallen to one-third of its 2008 high, which as reduced the incentive to invest in drilling at this time. • Pennsylvania’s average gas well earns profit averaging 15 percent of investment. Governor Rendell’s proposal will tax each well by one-third of its average cash flow. • Seneca Resources Corporation already left Pennsylvania due to higher-than-expected costs. Seneca was the seventh largest drilling company (by market share) in the state, reducing Pennsylvania’s lease revenue by $31 million. • Through increasingly stringent environmental regulations and the desire for a more tax revenues, Governor Rendell has undermined Pennsylvania’s budding natural gas industry. • Drilling companies are relocation to other states, like Louisiana, where drilling in the Haynesville Shale
