What a severance tax means for PA Jobs, Education, and Royalties

Pennsylvania currently is one of the most expensive states for oil and gas operations due to high income tax rates and impact fees. A severance tax could have a stifling effect on the economic expansion that the oil and gas industry has brought to Pennsylvania.

Job Opportunities in the Industry

  • From 2005 to 2012, 90 percent of all new jobs in Pennsylvania were a product of the oil and gas industry
  • As of 2013 the oil and gas industry employed 245,000 people in Pennsylvania
  • The average salary for core industries in the Marcellus Shale is $89,000

Below is a projection of job opportunity for the next six years within the oil and gas industry. A steep severance tax could slow oil and gas expansion in Pennsylvania and effect hiring opportunities or even move operations out of Pennsylvania all together.

Educating the Future Workforce

As stated above, the growth of the Marcellus Shale has provided many Americans and more specifically Pennsylvanians with increased job opportunity. Newly created jobs, along with job openings are creating a demand for an educated work force. To help ensure a quality workforce in their area of operations, many companies have been making significant investments of time, expertise, equipment, and funds, to local colleges, universities, and education programs.

The Pittsburgh Technical Institute recently opened a $3.5 million Energy Technology Center after donations from various energy companies including, Columbia Gas of Pennsylvania, Equipment and Controls Inc. and Lincoln Electric to name a few. The center offers programs in Welding Technology, HVAC technology, and Oil and Gas Electronics.

Just last November Johnson College in Scranton, Pennsylvania announced that they would begin offering compressed natural gas fuel systems courses to students studying in their diesel and automotive programs. Also, Pennsylvania College of Technology and Penn State Extension collaborated to create Shale Training &Education Center to meet growing education needs of the oil and gas industry in Pennsylvania communities. Lackawanna College was able to expand their School of Petroleum and Natural gas after a $2.5 million donation from Cabot.

Companies like Cabot and Southwestern Energy are involved with JA NEPA, or Junior Achievement of Northeastern Pennsylvania which is an organization whose goal is to educate and inspire young people to value free enterprise and gain interest in business and economics.

Royalties in Pennsylvania

In the last seven years royalties income has risen astronomically throughout the state of Pennsylvania. In 2013 Cabot paid $181 million in royalties in Susquehanna County. Royalties mean money going directly into the pocket of Pennsylvanians. Plus the 3.07 percent personal income tax on income in Pennsylvania ensures more funding goes to the state as well.

In the case of a competitive industry like oil and gas production, money and opportunity tend to flow in the path of least resistance. If a high severance tax is enacted operations in Pennsylvania could decline and royalties to Pennsylvania landowners could follow. Not to mention if royalty amounts decrease than the income taxes they pay on that money will also take a dip.

Have your voice heard

Ultimately the decision will come down to Harrisburg where it could come to a vote in the Pennsylvania state senate as soon as July. It is important to reach out to your elected officials about any concerns or questions you may have about the severance tax or any other proposed legislation. A simply and quick way to get the attention of you state legislators is to email them through the United Shale Advocates website. Another easy way to spread to share your story and become part of the conversation is to use the hashtag #JobsNotTaxes on social media.

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Maria Turconi

Maria Turconi was born in Pittsburgh, Pennsylvania. She is currently pursuing a BA in Public Relations from Penn State University. Maria currently works as an Intern in External Affairs for Cabot Oil & Gas Corporation where her responsibilities include writing for Cabot's social media, scheduling content and event planning.

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