Pennsylvania's Gas Boom: Big Production, Modest Economic Impact
Pennsylvania, the nation's second-largest natural gas producer, finds itself in an unusual position. Despite its abundance of energy resources, the state reaps less financial benefit from extraction than many others. Most major producers, like Chevron, are headquartered in the United States, and local taxes are replaced by an impact fee that varies widely.
Pennsylvania's natural gas industry is booming, yet the state's coffers aren't overflowing. This is partly due to the lack of local property taxes on oil and gas production, unlike most other states. Instead, the impact fee, which ranges between $150 million and $280 million annually, is used to replace these taxes.
Landowners, however, do benefit. In 2014 alone, they received an estimated $2 billion in royalties. The state also earns royalties from leasing its own land for production, amounting to tens of millions of dollars each year.
Despite this, the industry's contribution to Pennsylvania's GDP is modest, at just 1.3% in 2023. It accounted for an even smaller 0.1% of wages and benefits for workers in 2022. This is partly due to depressed natural gas prices, caused by insufficient pipeline infrastructure and increased oil production in the Permian Basin.
Pennsylvania's natural gas industry, while significant in production, has a relatively minor impact on the state's economy. Most major producers are based in the United States, and the state's financial benefits are limited compared to its energy output. Efforts to improve pipeline infrastructure and secure more local economic benefits are ongoing.
