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Are States Missing Out On Millions From The Fracking Boom? Are States Missing Out On Millions From The Fracking Boom?

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Are States Missing Out On Millions From The Fracking Boom?

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(MLADEN ANTONOV/AFP/Getty Images)

Are States Missing Out on Millions From the Fracking Boom?

The United States has fracked its way to an energy boom. But when the time comes to turn the natural-gas windfall into lasting wealth and welfare, states at the center of the boom have gone in different directions.

 

Most of the nation's largest energy states have enacted a severance tax—a levy imposed on the value of the resource produced. When the tax is applied to natural-gas production, the more gas that comes out of the ground, the more money goes to the state. But Pennsylvania—which this year vaulted past Louisiana to become the second-largest natural-gas-producing state, according to state data—has decided to do things differently.

In 2012, the Keystone State enacted a fee on unconventional wells drilled in the state. Pennsylvania's impact fee is paid out annually over a 15-year time frame at a rate that's adjusted each year based on the price of natural gas and the age of the well. Republican Gov. Tom Corbett says the system is facilitating the energy boom while giving the state a fair cut of its profits. But Corbett has left himself vulnerable to critics who say he's taking too light a touch on the companies developing his state's resources—and costing Pennsylvanians millions in the process.

The debate unfolding in Pennsylvania—which you can read more about as part of National Journal's New Energy Paradigm series—is part of a much larger question: Should states be setting money aside from the natural gas windfall to break the boom-and-bust cycle that too often comes with natural-resource extraction? Can a balance be found to make sure state residents benefit from the boom without driving drillers away? Or are the policies that already exist detrimental to the industry? What states have done the best job so far in striking a balance and which ones serve as a cautionary tale?

 

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