Natural Gas Supports Progress in Pennsylvania

Mark Green
Posted June 21, 2024

There’s not a better example of the way natural gas and oil benefit the communities and states where they’re produced than the fees and taxes energy companies send annually to Pennsylvania.

Sure, there are other examples – including oil and natural gas’ funding of the federal Land and Water Conservation Fund. Yet Pennsylvania’s natural gas impact fee, which has provided more than $2.7 billion to the commonwealth since 2012, shows a specific way energy and communities benefit together.

Stephanie Catarino Wissman, API-PA executive director, commented on 2023 impact fee revenue, which totaled $179.6 million:

“Pennsylvania’s natural gas industry pumps hundreds of millions of dollars annually into the state and local economies, boosting small businesses and communities. Every year, dozens of road and bridge repairs, park and conservation projects, public safety and other critical community needs across the state are funded by natural gas impact tax revenues.” 

The chart below shows annual impact fee disbursements:

And this one shows the range of beneficial public uses of those funds, by counties and municipalities:

These include construction of public infrastructure, first responders, environmental programs, water preservation and conservation, and tax reductions for localities.

Pennsylvania’s natural gas impact fee is based on the average annual price of natural gas and the age of the well. The first chart above shows how fee totals have varied from year to year. Last year, the average annual price of natural gas on the New York Mercantile Exchange (NYMEX) was $2.74 per MMBtu, compared to $6.64 per MMBtu in 2022 – partly due to a warmer-than-average winter and sufficient natural gas storage. In 2022, revenue for the commonwealth from the fee reached a record $279 million.

Natural gas - production provides broad benefits to Pennsylvania – revenues for public uses noted above, as well as job creation and economic growth.

Wissman:

“Natural gas production continues to be a major economic driver for the Keystone State. This energy advantage has served Pennsylvanians well – abundant and affordable natural gas, thousands of good jobs and billions of dollars in impact tax revenues for communities in every corner of the commonwealth – and underscores the importance of having a robust energy sector and commonsense policies and timely, predictable permitting processes to support it.”