Makes Me Mad... short comments on news, punditry or other nuggets of conventional wisdom make me mad enough to stop hollering at the radio/tv/newspaper/screen and write.

Cross-Posted at Spilling Ink.


I don't know if the military operations in Libya is a good idea or not. But in favor or against, I wish the conventional wisdom would give up on the mania over "mission objectives" or "end game." This is offered up as serious critique of Obama's decision to start a new war. We either see this as a concern or criticism from politicians, or embedded in news articles without any attribution which reinforces the sense that it is an unquestionably valid point.

Here is my objection: wars are messy, complex events. The mania over a defined mission is some sort of collective learned response to Viet Nam. That war is commonly seen as a mistake because it went on too long and their was mission drift from supporting the South Vietnamese government (which we either directly or indirectly installed. Sorry, no time to make myself a SE Asia expert this morning). Hence, since then, Presidents, congressional leaders, and paid pundits want every conflict or war defined in terms of "mission objectives" and "end games." As if this is a board game or a shopping list with discrete boxes we can tick off and then "go home."

Here are some US-led or US-involved military missions that I would like to know what the "mission objectives" are which, once we ding the bell and get the gold star, we can imagine withdrawing and no longer being involved.

The Korean peninsula

The "War on Drugs" in South and Central America

Afghanistan (did it start in 1979 or 2003?)

Iraq

The Global War on Terror

Patrolling the Red Sea against Pirates

Taiwan

Military/Intelligence Drone operations in Yemen, Pakistan and who knows where else?

My point? As Tolstoy described it in War and Peace, and I am paraphrasing, war is only clear when seen from the lofty armchair of those not involved. On the ground it is fog, murk, rattle, and crash. It is a foolish to act as if there are clean and discrete wars on the one hand and murky, protracted ones with unknowable, uncertain outcomes down the road. They are all murky, liable to be long, and chock full of uncertainty.

I wish our public conversation could start at that point instead of the public relations blitz that this war is going to be different. Maybe, maybe, we could then have a more honest conversation about what our gold and blood are paying for.

Young father to bike to Harrisburg to meet with Corbett

“The Corbett administration's actions for the gas industry are out of control.”

Pine Grove Mills, PA. On Wednesday, March 9, Peter Buckland will ride his bike 110 miles from his home in Pine Grove Mills (Centre County) to Harrisburg to arrange a meeting with the Governor. Peter is a PhD candidate in the PSU College of Education and the father of a 3 year old son. He plans to arrive in Harrisburg by about 1 p.m., in time to participate in a protest being organized by Penn Environment, that will be held at the Capitol Forum.

Immediately afterward he will go to the Governor’s office to personally deliver his written request for a meeting. Peter says, “I will do this in person, with some insistence, instead of through the faceless email system or fax system. My point is to put another real face to this. Unlike the gas industry, we don't have hundreds of thousands of dollars to buy access to the governor but he HAS to talk with us, he is OUR governor."

Up to this point Buckland has attended a few environmental protests, but is now compelled to activism on a higher level, saying “The Corbett administration's actions for the gas industry are out of control. Yanking the DCNR's ability to assess potential impacts on state land and gutting the DEP's ability to monitor air quality from drilling sites pushed me to this point.. For me this is very personal because I spend hundreds of hours in Rothrock, Bald Eagle, Moshannon, Sproul, and Tioga on my mountain bike, on hikes and camping.”

Buckland believes that the governor needs to reinstate the former DCNR policy that would limit new drilling and that he must impose a severance tax on the natural gas industry. He adds, “It is also about the quality of our water and air and my hopes and fears as a father. As a citizen of this commonwealth, the commonwealth's government should help me and my fellow common people to reach the common good. I will ride even if it rains or snows.”

Buckland invites those at the rally to join him afterward as he delivers his meeting request to the Governor. Other concerned citizens from around around the state have already agreed to join
him. He encourages others to submit their own meeting requests on Wednesday.

Peter Buckland can be reached at peter.evolves@gmail.com

Notes from Marcellus Shale/Severance Tax Panel

Several CSCC members (myself included) attended tonight’s Bucknell Institute for Public Policy forum on the topic of the Marcellus Shale and severance taxes. The speakers were State House Representative Rick Marabito (D-83) and State Senator Gene Yaw (R-23). I took some notes, and wanted to share some of the highlights of what was said.

Overview
Mr. Marabito gave a prepared speech, drawing analogies with coal industry, emphasizing impacts & costs of drilling, emphasizing the fact that 38 other states have severance tax, and outlining policy vs. political concerns. Mr. Yaw gave a rebuttal to many of Mr. Marabito’s points, said industry was not getting a “free ride,” and claimed that PA already had “highest taxes” and “the strongest environmental regulations” of any state.

The crowd (large, but not filled to capacity) was generally vocal and showed much hostility towards Mr. Yaw. They listened politely to Mr. Marabito and applauded at the end, whereas audience members responded to several of Mr. Yaw’s statements as he made them. He made an unfortunate choice to begin his speech with a rhetorical question which may have prompted some of this response. Several times, he asked audience members to be quiet and complained to the moderator. (One particular example was when a questioner was, rather harshly, asking him to state how much he had received in campaign donations from the industry, and how much business his law firm did with industry clients.)

With all due respect to the senator, he did himself a particular disservice by: (a) claiming he had “no idea” how much the industry had contributed to him, and told people to “look it up” on a website; and (b) commented that the personal tax rate in PA was “something like 3.2%.” (This may be picky, but as someone who just filed his income taxes, I thought a state legislator ought to know the tax rate is 3.07% and has been since 2003.) Both gentlemen made statements without directly referencing sources (I’ve noted these below), but Mr. Yaw repeatedly stated beliefs that the gas industry was being unfairly singled out, and that we needed to entice companies to come to PA (as opposed to companies coming here because of the physical location of the gas), which was disappointing.

Below is a summary of the statements they made; most of these are not direct quotes, and I apologize for any errors or omissions. I did not take as good notes during the Q&A period, other than the ones mentioned above.

Rick Marabito:
Said the Marcellus Shale offered an “awesome opportunity,” but that we have an “awesome responsibility” as well.

Emphasized importance of distinguishing between policy issues and politics issues related to severance tax.

Prefers to call severance tax an “impact fee” because drilling will impact the community in three major ways:
1. Infrastructure (roads, bridges)
2. Environment (soil, water, air)
3. Social relations (population growth will require additional public services)

Because well sites are off the beaten path, we don’t think about them. All businesses and individuals should recognize that there are costs associated with drilling. Gas companies are responsible for these impacts, so they should contribute to costs. If we don’t have an impact fee, costs will be borne by other businesses and taxpayers. For 150 years, there was no tax on coal industry and we are still cleaning up from it.

38 other states impose a severance tax. When we buy gas from other states, we pay their severance tax. When we sell out of state, the cost of the severance tax will be passed onto the end-use where it belongs.

PA Budget and Policy Center estimates we have lost $145M so far by not acting and establishing a severance tax.

If we impose a severance tax, there is concern about where money goes. We would like revenue to stay in local area, but negotiations in legislature will be needed. Most legislators (in House) are from southeastern PA; they will argue that money should go to general fund for fairness.

Lobbying is also a problem in Harrisburg. PA is 1 of 11 states that don’t limit campaign contributions. Natural gas companies gave $2.85M to PA legislators from 2001-10. Emphasized that just because people accept a contribution doesn’t mean they act one certain way; he disclosed that he received donations from 2 gas companies for approximately $1000.

Closing thoughts: Polls [source?] show 60-70% of public is in favor of tax. Many people talk about adopting Arkansas tax model (a delayed tax), but ex-governor of Arkansas made statement last month that he believes Arkansas was hurt by that and should increase tax. Push legislators to do the right thing, and not let us fall into the same cycle as what happened with the coal industry. “If a severance fee is good enough for Texas, why isn’t it good enough for Pennsylvania?

Gene Yaw:
Opened with a rhetorical question, “Why do you think a severance tax would be paid by the gas industry?” which led to an uncomfortable silence, then some responses from audience which devolved into some back-and-forth and Mr. Yaw asking people to let him speak. Claimed that severance tax would just be a production cost, passed onto landowners.

Idea that gas industry was getting a “free ride” was "false." “Studies” [source?] say that severance tax would make us the highest taxed place in the world. Gas companies paid $1 billion in taxes in the past year [source?]. Texas is lowering their severance tax rate [source?] because they are afraid drillers will leave and move to PA.

Mr. Marabito’s analogy with coal was unfair, because during coal boom, we did not have the EPA, DEP, Clean Water Act, Clean Air Act or other environmental protections.
If we enact a severance tax, money will go into a “black hole” in Harrisburg where legislators stand in line for handouts, and money will not come back to local community. In 2002, state supreme court ruled that gas wells were not subject to tax. Has introduced a bill that will correct that but allow localities, not the state, to tax wells.

Closing thoughts: We’ve enticed other businesses to come here; why not do the same with the gas industry?

Marcellus Shale/Severance Tax Panel

Tomorrow night (Thurs, Mar 3, 7:30pm, LC Forum @ Bucknell), the Bucknell Institute for Public Policy is hosting a forum to discuss the issue of severance taxes (which currently don't exist in PA) and the Marcellus Shale with speakers PA State Senator Gene Yaw (R) and PA State House Rep. Rick Marabito (D).

The following information is set to be mailed out tomorrow a.m. to the CSCC list, but I thought I'd also post it here. It's a collection of key facts and suggested questions for the speakers (mostly Mr. Yaw, since he's our representative) that I hope will inspire more. For more in-depth research and analysis, I'd recommend the PA Budget & Policy Center's website at http://www.pennbpc.org/severance-tax

Key Facts:

1. The 14 states with greater natural gas production than PA have severance taxes, and they have booming industries that have grown at an average of 5% per year since 2004.
2. During the recent recession, the states with severance taxes fared better than those without because of high energy prices generating significant tax revenue.
3. Natural gas drilling generates predictable costs to the state (new roads, road reconstruction, bridge repair) and unpredictable costs (environmental hazard cleanup, emergency medical services, additional environmental inspection and testing). Severance tax revenue in other states is often shared with local governments to recoup these costs.
4. PA's proposed tax (in the House-passed bill) is an effective 7.3% tax rate, which is comparable to or lower than Montana (7.9%), New Mexico (8.4%), Wyoming (10.2%) and West Virginia (5.8%).
5. Studies in western states have shown that companies go where the gas is located, and that different tax rates in different states have little impact on their decisions.
6. PA gas is going to be more profitable because wells are cheaper to drill than in other shale formations, the reserves are larger, and PA is closer to the northeastern market.
7. PA already exempts the drilling industry from property taxes, taxes on drilling equipment, and most companies (LLCs) pay the lower Personal Income Tax rates instead of the corporate tax rates.
8. The drilling industry often cites a 2008 "Penn State Report" that claimed a severance tax would reduce drilling activity by 30%. This report was the work of two professors, one who has left Penn State, and was funded by the Marcellus Shale Coalition (an industry trade group), a fact that was never originally disclosed by the authors. Dean Easterling of Penn State has since said that there were "flaws in the way the report was written and presented to the public," and suggested "the authors may well have crossed the line between policy analysis and policy advocacy." The PA Budget and Policy Center, a Harrisburg-based nonpartisan group has said the report overstates the 30% figure, overstates industry tax impacts and economic impacts, and doesn't disclose its mathematical modeling assumptions so that they could be reviewed by other experts, so it basically serves the narrow financial interests of its funder, the gas industry.

Suggested Questions for Senator Yaw:

1. Former DEP Secretary John Hanger, whom you praised in Tuesday's Daily Item newspaper, has called on DEP to order immediate testing for all public water systems for radium or radioactive pollutants. It seems that a severance tax on the drilling industry, who makes this testing necessary, would be a very sensible way to pay for this type of testing. Without the severance tax, the cost would fall to the water utility companies, or taxpayers. Why would you favor the gas companies over the water companies or taxpayers on this issue?

2. Studies in Wyoming and Utah in the past decade have both found that reductions in their oil severance tax did not increase production, while raising tax rates had negligible impact on production. Even so, let's assume for a moment that implementing a severance tax did somehow slow production. The natural gas is not going anywhere--companies that want to harvest the Marcellus Shale gas have to do it here in PA. The price of natural gas will also surely go up, not down, in the future. Thus, the longer it takes to harvest, the more money for the industry, the more long-term careers for our workers, the more motivation for companies to invest in staying here, and a longer period of prosperity for Pennsylvania. So even in a worst-case scenario, if a severance tax slowed production, why wouldn't you support such a measure that helped build a longer-term, stable economic situation for everyone involved, while also providing revenue to the Commonwealth?

3. The 14 states with greater gas production than PA have severance taxes, and booming industries. Pennsylvania, unlike other states, already exempts drilling companies from paying property taxes on oil and gas reserves, and drilling equipment is not taxed, either. Most natural gas companies are also registered as LLC's which mean they pay the same Personal Income tax (3.07%) that individuals do, not the corporate income tax (9.99%). From the perspective of any other industry who plays by the rules, this is not a "free market" competitive situation, it is basically a "free ride." Companies go where the gas is; different tax rates in the western states have not resulted in more or less investment from state to state. Why would you support a free ride for one industry, and also deprive PA of the same revenue that other states enjoy?