Gov. Ed Rendell will revive the idea of taxing the natural gas industry when he gives his budget address next week. State officials anticipate the move would generate hundreds of millions of dollars in the next year alone.
The proposal was scrapped from last year's budget after mining companies complained that new taxes would unfairly burden an industry still in its infancy. That argument might not hold up this time around:
In December, energy giant Exxon Mobil agreed to pay $41 billion for XTO Energy Inc., in part on the strength of XTO's Marcellus holdings. Additionally, when the state opened 32,000 acres of state forestland to drilling, the leases brought in $128.5 million-twice the amount officials expected.
In 2008, the state saw 195 Marcellus wells drilled; last year, there were 763. Rendell said the DEP will seek to permit 5,200 wells in 2010.
There are other concerns with taxing drilling, though. Some Republicans oppose any tax hike on philosophical grounds. And leading environmental groups and some Democrats are concerned that the idea will lead to more drilling on publicly owned land.
PennFuture has called for a moratorium on drilling in state forests until scientists have studied its effects on wildlife and habitat. The environmental advocacy group also wants all revenues collected from public land leases to remain within the Department of Conservation and Natural Resources to address maintenance issues.
We can expect the natural gas tax to be one of the controversial elements of the upcoming state budget debate. We'll keep you posted on all the latest developments, including live reports from Harrisburg on the day of Rendell's budget address.
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