Tuesday, September 23, 2014
Inquirer Daily News

Shell game! Corbett's "cracked" scheme to give away your cash to an oil giant

They are the world's second largest corporation by revenue, and last year Royal Dutch Shell made an astronomical $31 billion in profits - more than triple what the global oil giant was earning just two years earlier.

Shell game! Corbett's "cracked" scheme to give away your cash to an oil giant

They are the world's second largest corporation by revenue, and last year Royal Dutch Shell made an astronomical $31 billion in profits - more than triple what the global oil giant was earning just two years earlier.

But Gov. Corbett apparently doesn't think the hard-earned cash you fork over every time you pull into a Shell station is enough.

He wants to give them your tax dollars, too - perhaps as much as about $1.7 billion over the next 25 years.

It would actually be too kind to call Corbett's corporate-welfare scheme involving Shell's planned ethane-cracking plant on Pennsylvania's far western border a tax break - because the deal has already won state approval to avoid taxes, in a specially created Keystone Opportunity Zone. So this proposed new deal - which was being negotiated in secret until long-time Harrisburg journalist Pete DeCoursey broke the news Monday - is essentially just a straight-up cash giveaway to Big Oil.

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Corbett defends tax break

For a facility it is already planning to build here.

In the state where it arguably would have been built anyway without a single dollar of tax incentives, since this is where ethane wells are already being drilled.

Did I mention that this is the same Tom Corbett who wants struggling unemployed folks getting food stamps to prove they don't have money stashed away, whose steep 2011 cuts to school funding deeply exacerbated an education crisis that's risking everything from school plays in Upper Darby to the janitor who cleans your son's classroom here in Philadelphia? I guess janitors didn't realize the threshold to get Corbett's attention is $31 billion.

"It's essentially a big giveaway of money we didn't have, to attract a company we were already getting," said Sharon Ward, the director of the Pennsylvania Budget and Policy Center, a progressive think tank, who called the proposal "unprecedented."

It was with great fanfare that the Corbett administration announced in March that Pennsylvania had beaten out Ohio and West Virginia to convince Shell to build the multi-billion-dollar plant in Monoca, Pa., in Beaver County west of Pittsburgh. The plant takes ethane - one of the chemicals that's increasingly harvested in the hydraulic fracturing, or fracking wells in the Marcellus Shale region of Pennsylvania and across Appalachia - and breaks it down, or "cracks" it, to make (no "The Graduate" jokes, please) plastics.

In Corbett's crusade to turn Pennsylvania into Texas, the Shell plant was his mechanical bull. It will mean jobs in an economically depressed region; state officials say there could be 7,000 direct hires and, indirectly, 20,000 jobs created, although critics say estimates of job gains related to the fracking industry are typically hyper-inflated. In return, the state created a special 15-year Keystone Opportunity Zone tax break, and promised infrastructure funds from the new fee on drilling.

Nothing was said about this additional cash giveaway estimated at $67 million a year for the 25 years - a measure tucked inside an obscure tax code bill due for legislative action in a few weeks.

Why do this? In March, Corbett - chronically short of ideas when it comes to funding classrooms - told reporters that for a mega-corporation dangling jobs over Pennsylvania "[w]e would be open to con­sid­er­ing just about any­thing." On Monday, a Corbett economic development aide insisted to the Inquirer's Joseph N. DiStefano that this new tax credit is aimed not just at Shell but to encourage other manufacturers using ethane to locate here.

But Ward, the budget critic who looked at the draft legislation for the first time on Monday, said it appears to be targeted toward Shell's ethane plant, and she noted that with all the other tax breaks that the oil giant is getting, it's more likely that Shell would sell the tax credits to other companies for cash - a possibility that a state official acknowledged to the Inquirer.

Of course, you could also make that case that it was Shell's money - indirectly - that helped make Corbett governor in 2010. How so? In May 2010, Royal Dutch Shell paid $4.7 billion for Pennsylvania native Terry Pegula's oil-and-gas company East Resources - roughly the same time that Pegula was giving $305,000 to Corbett's campaign, making him one of Corbett's largest donors. And Shell continues to spend heavily on lobbying Harrisburg - some $277,323 just in 2011, while the ethane plant deal was being hatched.

Still, Monday's report stunned many folks and set the Twittersphere on fire - especially among environmentalists. "My first reaction was somewhere between 'shock and awe' and disgust," said David Masur, director of Philadelphia-based PennEnvironment. Masur and others do think, however, that Monday's widespread publicity may have killed the idea - in a year in which nervous legislators are facing an anxious and angry Pennsylvania electorate.

The greatest irony may be that the news comes days after reports that Corbett is under pressure to re-tool his image, with critics calling his budget cuts for schools and for the poor heartless, and portraying the governor as "The Tin Man" from the Wizard of Oz. Now you have to wonder if "The Scarecrow" would be a better fit, since this Big Oil cash giveaway is so politically tin-eared you have to ask what's happened to Corbett's brain as well.

About this blog
Will Bunch, a senior writer at the Philadelphia Daily News, blogs about his obsessions, including national and local politics and world affairs, the media, pop music, the Philadelphia Phillies, soccer and other sports, not necessarily in that order.

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