Higher Natural Gas Severance is a Tax on WV’s Future

The West Virginia oil and natural gas industry has been identified by some as a source to fund annual cost increases of $50 million for the Public Employees Insurance Agency.

In a recent commentary, Jay O’Neal, treasurer of the Kanawha County chapter of the West Virginia Education Association, wrote “there is plenty of money available to PEIA without hurting working West Virginians. It’s just a matter of priorities.”

Mr. O’Neal advocates an increase in the natural gas severance tax as a source to fund PEIA, as he believes revenue from the resource will continue to increase. Contrary to Mr. O’Neal’s statement, an increase in the natural gas severance tax would be certain to hurt working West Virginians, as well as the state itself.

Mr. O’Neal’s theory is easy to understand. Tax one of the fastest-growing and successful industries in the state because they won’t feel it, right? Wrong. In fact, taxing the resource that could be an economic game changer for the state of West Virginia is a surefire way to shoot us all in the foot.

West Virginia sits on top of the Marcellus and Utica shales, two of the largest oil and natural gas reserves in the world. We have exponentially increased natural gas production in this state over the past decade due to the advances in technology that allow us to reach vast reserves in these two shales.

However, West Virginia is not the only state on top of these shale plays. Pennsylvania and Ohio are, too, and they are drilling and producing more than we are, due to the industry-friendly climate in those states. In fact, Pennsylvania produced more than three times the amount of gas as West Virginia last year, with Ohio not too far behind them. Only recently did West Virginia pass mineral efficiency legislation, while our surrounding states have had such laws in place for years.  Read full article by Anne Blankenship here