This is part 2 of TRNN’s coverage of the corporate takeover of Pennsylvania’s natural gas reserves. Today, the Philadelphia Inquirer reported on Governor-elect Tom Corbett: “Coming into the job in January, the Republican prosecutor-turned-governor will immediately have to tackle an estimated $4 billion deficit. And because he made a no-tax pledge during his campaign, he will have to do so primarily by slashing spending.”
Free Gas in Pennsylvania?
By Jesse Freeston and Malak Behrouznami
The Real News Network
FREESTON: Governor-elect Corbett said any tax would hurt the state.
CORBETT: I believe we would chase away these companies at this point in time.
FREESTON: Looking at the industry’s own words, it’s hard to believe that Corbett is right. The most recent edition of Oil and Gas Investor includes a feature on drilling in the Marcellus. The article polls seven company executives and analysts, all seven of which extol the profitability of the Marcellus, despite the fact that gas prices are at record lows, sitting below $4, when they went as high as $13 just two years ago. Companies are moving into Pennsylvania at rapid pace. Insiders are quoted as calling it extremely good geology, the most economical and the lowest cost source of natural gas in North America. One analyst suggested companies could make a profit here if the price was only $2.50. Meanwhile, the price of gas is expected to rise very soon, and no tax will be levied in Pennsylvania. Freelance journalist Jean Friedman-Rudovsky is a Pennsylvanian native who now resides in Bolivia. She thinks that Pennsylvanians ought to take note of Bolivia’s gas experience.
JEAN FRIEDMAN-RUDOVSKY, FREELANCE JOURNALIST BASED IN BOLIVIA: At least in Bolivia that logic hasn’t really panned out. Bolivia has the second-largest natural gas reserves in all of South America, and in 2006, President Evo Morales nationalized those gas reserves. And what that in fact meant was that he started heavily taxing the foreign companies and foreign governments that were extracting natural gas from here in Bolivia. Before 2006, Bolivia was receiving about 20 percent of the profits made off of its own natural gas reserves through royalties and taxes. After 2006, they started [making] 80 percent. So, literally it was inversed: the companies before were making 80 percent, and now the Bolivian state maintains 80 percent of the gas royalties. And the most important thing which goes against the logic of this candidate is that none of the companies left Bolivia, simply because it was a resource that they still needed, so they had to give in to whatever Bolivia was demanding.
FREESTON: Still, others are questioning why the state would give up an opportunity to raise large amounts of money when it is faced with a projected deficit of $2 to 5 billion next year, while at the same time school boards around the state are in serious debt crisis, with towns like Harrisburg forced to debate cutting kindergarten and high school sports programs.
Also see part 1, Pennsylvania to Become ‘Gasland’?