Shell game! Corbett's "cracked" scheme to give away your cash to an oil giant
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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.
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.
- Shell is not drilling. They will purchase the natural gas from suppliers in PA, OH and WV. The PA location makes the most sense for Shell. However, they are also considering sites in OH and WV that are close to rail and barge terminals along with skilled workers. This is a huge investment for Shell, one that they are carefully evaluating. All three state are offering incentives, part of the evaluation process is which state has the best offer and how that offer impacts the overall economics of the project and the return on Shell's initial investment. A simple comparison is purchasing a car. The buyer has multiple choices, but generally opts for the vehicle that makes the most sense and has the best price. The dealer sweetens the deal by offering a rebate or financing incentive. PA, OH and WV are doing the same thing.
— BusinessOwner1 - Face it, Shell can do whatever they want with these jobs, including moving them to another state or country when they get a better deal. If I was Shell, I'd hold out for even MORE cash. Why not? Corbitt is willing to give them, in his own words, "pretty much anything". So why not back out at the last minute and ask for even more?— OnlySaneGuyLeftInTheRoom
- Welfare is welfare. I don't want to pay so you can get a job, that's your problem you are unemployed. I want my tax money going to things I get to use like the school system, infrastructure, and services.— UncleStosh
- How much more money do our politicians have to give away to big business before people like Bob and Sadim get mad? How many more horrific oil spills does big oil have to have before people like Bob and Sadim get disgusted? And how much more do lobbyists for these companies have to buy off our state and federal government before people like Bob and Sadim understand that they are being lied to by big business and government? Seriously, what more has to happen before people wake the @#%$ up? How can anyone, republican, democrat, or independent think it's ever a good idea to give away state money to a corporation that made billions of dollars in profits last year?— Hemingway
- For all of you Republican socialists who think it is the governments place to create "growth", jobs, and monetary policy, let a real conservative free market capitalist explain something to you. All of the problems in the economy start when the government is tasked with trying to control it. The economy is not a thing but a sequence of billions of interactions. It is uncontrollable and when government creates BS corporate incentives, it's worse than social engineering. At least the other forms of welfare do not create Bubbles and boo/bust cycles completely caused by low interest rates manipulated by the so-called free market capitalist bankers(they are not, they are thiefs as they skim off the top during the bubble and then de-value your money to make up for it) If you want to throw real free market credentials around, it is not this hogwash about the state of PA paying corporations welfare.— UncleStosh
- DarnelC
You don't have to take Bunch's word for it. The information is out there. http://stateimpact.npr.org/pennsylvania/2012/06/04/report-corbett-wants-to-give-shell-a-1-7-billion-tax-break/
There's plenty of information about the terrible effects fracking is having on the communities where it is being done. There's also plenty of information about how the amount of money a politician receives from corporate doners directly effects their voting records. These guys aren't working for us. They are working for the corporations that put money into their pockets.— Hemingway - why not show the other side of the revenue stream, how much in taxes will be recouped from new jobs, employment taxes, sales taxes etc. all stories have two sides. to only report one side is shoddy journalism and is not informational reporting but instead is shock and entertainment value.— tony bell
- Remembering all the jobs created last decade as Republicans heaped all kinds of tax breaks for the rich...oh wait— BillHicksLives!
- Coerbett is crazy for granting tax breaks. He could just give $3000 toeveryone to buy
Thingamajigs" and everything will be fine. Warng, the video is painful to watch:
http://www.zerohedge.com/news/guest-post-example-why-country-headed-wrong-direction— Phishface - tax breaks are just corporations' way of playing state against state in their perpetual race to the bottom. Corporate welfare works because it's a lose lose deal for politicians, they can either take the hit of giving away billion in taxpayer money, or they can risk losing jobs to a more corrupt state government. In this case unfortunately, Corbett was only competing against himself it seems.— Pelti
Comment removed.- What a tool. Tax breaks are "giving away your tax dollars". Counting your chickens before they are hatched Bunchy? Now there's a good little class warfare socialist.— rudytbone
- It is really sad to see shills misrepresent facts. My personal favorite is the joke on education dollars. Pennsylvania is ranked 12th in spending and 9th in student performance. Minnesota spends $1,000 less per student yet is ranked 3rd. It isn't about how much money is spent, it is how that money is managed. We have smaller class size and more aides and other wastes of money than ever before. The teachers unions have turned education budgets into piggy banks and don't get me started on the money thrown away on making new scholls look like Frank Lloyd Wright designed them. Bunch is your typical left wing nut case who has already previously admitted that much of what he writes is done to spark outrage.....but what is truly amusing is having so many respond in support with no clue about the facts of the situations they use to "defend" their position.— reality fan
- The employees will pay taxes. They won't suck money out of the Commonwealth's coffers. Makes sense to me.— waynoNE
- and will buy homes, cars, gas, food, clothes, etc,etc,etc, I agree — Tom813
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