Marcellus Shale: Not An NBA Player, But Key To PA’s Future

First in an ongoing series examining all aspects of developing the Marcellus Shale.

Stories keep rolling in about the booming economy in a faraway land.  Tales of jobs, new construction on every corner, more jobs, hotels booked for a year, office space — long vacant — now renting for the highest prices ever fetched, and even more jobs.  Yet despite years of growth, the influx of foreign capital hasn’t subsided, but in fact, continues to exponentially increase. Combined, all these things have created a climate so healthy that taxes haven’t risen in eight years.

As with Doubting Thomas, something this good must be seen to be believed.

So as my trip was being arranged, I was asked the duration of my flight to China, and how long I’d be away.  As to the second question, the same day.  I can’t answer the first, because it’s based on a false assumption.  I was, most definitely, not going to China.

Although solid growth and low taxes are now virtually nonexistent in this country, I had a mere three hour drive to behold the only thing that can bring Pennsylvania — and maybe the nation — back from the edge of the abyss.

Time to get up front and personal.  Time to meet Marcellus Shale.


Pop quiz.

Which of the following is true:

A)    Bon jour, monsieur. I present to you Marcellus Shale, ze best French wine this side of ze Seine River;

B)    Meet Marcellus Shale, the new Philadelphia 76er who might help the NBA team win more than 10 games;

C)    Welcome to the Marcellus Shale, one of the largest natural gas fields in the world, and centered in Pennsylvania, where 60 percent of the state sits atop the reserves, whose liquid gold is conservatively valued in the hundreds of billions.

Unfortunately for vinophiles and the impotent Sixers, the answer is C. 

But unbelievably, there was almost an asterisk.  If lame duck Pennsylvania Governor Ed Rendell and his protégé, failed gubernatorial candidate Dan Onorato, had their way, the Marcellus Shale industry would have died before ever getting off the ground.  Those politicians wanted to impose a severance (extraction) tax on natural gas, as high as ten percent.  Rendell’s rationale?

Oil companies needed to pay their fair share.

Thankfully, Governor-elect Tom Corbett, with a No-New-Tax promise being the cornerstone of his campaign, trounced Onorato. In doing so, he slammed the door shut on the catastrophic failure that will forever be known as the Rendell Legacy, and opened a portal to opportunity not seen in Pennsylvania for generations.


Corbett and Onorato were like night and day on a number of issues, but none more important than how to proceed with the Marcellus Shale. A severance tax, especially the one proposed by Rendell/Onorato, would have undeniably been the death knell of what is a mobile industry.

While Pennsylvania is blessed with a sizable portion of the highly-profitable Shale, our competitors are not far behind: West Virginia, Maryland, Ohio, New York and up into Maine and Canada.  And Michigan, with the second highest unemployment rate in the nation, is making lucrative offers to the industry to extract Shale gas from beneath the Great Lakes.

In his attempt to make Pennsylvania competitive again — dare we say viable —, Corbett innately understood two things that were lost on Rendell.  First, if you want less of something, tax it.  Second, you can’t tax your way out of a recession and into prosperity.

But what about the “fair share” that the industry allegedly doesn’t pay?  Pure election year theatre, orchestrated in a shameless attempt to close the $5 billion budget deficit created by the reckless former Governor.

The real story?

The natural gas companies in Pennsylvania, just like all other corporations, are saddled with the second highest corporate net income tax (CNI) in the nation (10 percent), along with an onerous capital stock and franchise tax and the country’s most hostile legal system.  And this horrid picture doesn’t even include the world’s second-highest national corporate income tax rate (40 percent).

Put another way, the proposed severance tax…

Read The rest and post a comment at Philly Mag’s Philly Post:


Chris Freind is an independent columnist, television commentator, and investigative reporter who operates his own news bureau,

Readers of his column, “Freindly Fire,” hail from six continents, thirty countries and all fifty states. His work has been referenced in numerous publications including The Wall Street Journal, National Review Online, foreign newspapers, and in Dick Morris’ recent bestseller “Catastrophe.”

Freind, whose column appears nationally in Newsmax, also serves as a guest commentator on Philadelphia-area talk radio shows, and makes numerous other television and radio appearances, most notably on FOX.  He can be reached at

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December 2, 2010 at 2:29 pm Comments (0)

2010 Picks – Joe

Gov – Corbett
Senate – Toomey

3 – R- Kelly
4 – D – Altmire
7 – R- Meehan
8 – R- Fitzpatrick
10 – R- Marino
11 – R- Barletta
12 – D- Critz

(Edit: Jim Geraghty is looking at a net 70 seats for Republicans.)

US Senate: We pick up 8.  Details here.  The 9th might be Washington.

A very (very) long-shot 10th might be California, which I had written off in my aforementioned earlier picks.  Meg Whitman is probably toast in the Gov race, but she has a really good ad out that could boost the ticket a bit, or at least suppress those eager to vote for Governor Moonbeam.  Maybe, just maybe that puts the Senate seat in play.

There’s a fine line between having a partisan opinion and being a cheerleader.  I try not to be a cheerleader when it comes to predictions.  It pains me to confess that I think Critz will beat Burns.  I’ve fiddled with the numbers a bit and can’t see a scenario where Burns needs any less than 54% of Westmoreland County.  That’s a pretty tall order.  If you’re watching the returns come in, my fuzzy line in the sand is Cambria County in the 43-44 range.  If Cambria’s coming in less than 43% for Burns then our goose is cooked.  If it’s coming in at 44% or better then make some more popcorn, ’cause it could be a long night.

A few things could make me wrong about the 12th.  First, the idea that the independents weren’t around during the special election.

Second, the utterly massive shift in Roman Catholic voter sentiment.  (Maybe this has something to do with that.)  This Methodist boy in a disproportionately Methodist cranny of the state doesn’t have a good gut feeling for that concept, so let’s call that a Rumsfeldian “known unknown.”

This Catholic business, plus the literally unprecedented Gallup generic ballot figures, added to me cribbing off of FiveThirtyEight, makes me think we pull off the 10th and the 11th.  Calling Chris Carney a Blue Dog is an abuse of the term: He is pro-gun and an asterisk’d “pro-life” / pro-Obamacare liberal. (Funny how pro-life Dems are “moderate”, yet pro-life Republicans are right-wing extremist theocratic nutjobs who can’t win in Pennsylvania.  But I digress.)

Final Thought: The silver lining of the reapportionment process is that we’ll finally be done with these monstrosities we call our Congressional districts.

November 1, 2010 at 2:11 pm Comments (0)

Sanity in the Marcellus Shale Debate

Actually, I hate to call it a debate since its really more like a tantrum. As usual, we have the enviro-socialists on one side screaming about how the Marcellus Shale WILL KILL US ALL! and on the other side we have the rest of us who sense that we are witnessing the rebirth of industry in a State whose glory days were thought to be past. Yes, I understand that there can be impacts both to the environment and the communities where gas drilling takes place if these drilling companies mismanage their wells. I also know that we have plenty of laws on the books which require industry–any industry–to minimize its environmental impacts and which hold industries liable when they don’t. The idea that drilling in the Marcellus Shale is unregulated is a myth.

Leave it to the folks in Bradford, where they’ve been producing energy for over a century, to inject reason into the debate.

Is it, or isn’t it?

But we need to know, before we create an environmental disaster. Or nearly as bad, stifle an industry that can replace imported oil and power our vehicles and heat our homes, and bring a certain amount of prosperity to an area where there has never been prosperity since the big timber harvesting days of the early 1900′s.

Amen. Let’s get the facts. And while we’re at it, let’s examine the motives of the players. I think we can safely assume that the drilling companies are motivated by profit. Being a capitalist, I think that’s great. The reason I think it’s great is that the profit motive keeps the drilling companies from doing all the things that the enviro-socialists accuse them of doing: polluting waterways, damaging wildlife, building unsafe wells, and so on. Companies that do that be liable for clean-up costs and civil penalties that will make a healthy dent in their profit. Do it too many times and there will be no profit to speak of and the company will fold. Fine by me.

On the other hand, what are the motives of the enviro-socialists? It isn’t “sustainability” and it isn’t for industry to be “good neighbors”. It’s control. Consider that nothing is good enough when it comes to regulation. We have literally thousands of pages of regulations on the books, and still they are not enough. We need more more more. More regulations on dissolved solids, more taxes, more permits, more everything. Also consider that the enviro-socialists do not seek to educate; they seek to inflame and frighten. I dare you to read the Pittsburgh Post Gazette for one week and not see a letter to the editor calling for regulation, taxes, or an outright ban on Marcellus drilling. If you don’t find a letter like that you will certainly find one that accuses these drillers of wantonly visiting environmental and social destruction upon the landscape. It’s slander, and in a just world these environmental groups would be called to account in a court of law.

It is time for all of us to have a mature conversation about where we are in post-industrial America in the 21st Century. It is a fact that industry does impact the environment, our communities, and our lifestyles in ways that we do not like. We have noise, pollution, traffic, and inconvenience aplenty all thanks to our local power plant, water utility, chemical plant, or steel mill. But we also have a high standard of living, a long life expectancy, and a clean environment because the goods we produce in those same industrial plants generate the money that allows us to afford those things. Do you know how much it costs to install a sulfur dioxide scrubber on a power plant? A lot. Yet we can still afford cheap electricity. Contrast that with the Chinese who have no idea how much one of those scrubbers costs because they don’t have to install them. Instead, people walk around Beijing with masks on to filter out the pollution. Remember the ’08 Olympics?

Equally important are the the secondary benefits of our industrialized economy. We have cheap reliable energy which allows us to have things like the most advanced healthcare in the world. Solar power is fine, but how would you feel knowing the hospital where you’re having open-heart surgery can only keep the lights on on sunny days? If you’re life depends on getting from your hospital in Philly or Pittsburgh to one in New York or Cleveland, you want to be sure the helicopter can gas up and go, right? Or would you rather there be a shortage of fuel because there aren’t enough oil refineries left to produce a sufficient supply at a reasonable price?

These are the conversations we ought to be having because these are things that might come to pass. It is my firm belief that the enviro-socialists and all their fellow travelers on the left want to control every aspect of our lives. They mean to make themselves our rulers before we figure out what is going on. So open your eyes and fight back. The people in Bradford have figured it out. The rest of us can, too.

July 3, 2010 at 10:58 am Comment (1)

Re. Obama, The BP Escrow, & the Liability Cap

Let’s not lose sight of the fact that the $75m liability cap is actually a governmental market-fixing mechanism. Without that cap incentives for risky behavior would not be as attractive, and energy companies might be far more likely to restrain themselves from activities that would result in catastrophic accidents.

I concur that our President, and the government, do not have the legal authority to require BP to put that $20B in an escrow account, of course. But, contrariwise, there’s no good reason for them not to do it voluntarily. The ethics of the situation are pretty clear. They broke it, they bought it.

This ethical logic should have informed our actions when putting in this anti-market liability cap. Hopefully similar logic will prevail as we move forward extracting energy from the Marcellus. The environmental costs associated with energy extraction should absolutely be a part of the market price of that energy. If it were, alternative energy sources may start becoming more attractive in the marketplace.

June 16, 2010 at 8:16 am Comments (0)

Change Starts at Home: Sterns Elected Schuylkill Co. GOP Chair

Conservative rock star and close friend of the ‘cooler Joe Sterns defeated incumbent Robert Ames for Chairmanship of the Schuylkill County Republican Party on Saturday.

Joe is all of 35 years old and has been a leader in conservative politics for most of that time. Most recently he has served as Executive Director of the Citizens Alliance of PA. He’s a Constitutionalist who believes in individual liberty and personal responsibility. Joe is the type of person we need at the helm of every county party in the state.

Congratulations and good luck!

Remember we knew you when…

June 13, 2010 at 1:57 pm Comments (0)

Flashback: Incompetent Earmarking in #PA12

I just remembered an old WaPo bit from Dec-2009 about incompetent earmarking under the late Congressman Murtha that may be of interest to those plotting the Burns comeback in November. Here’s the meat of it (bold added):

“Let me tell you: We look at jobs. How do we attract jobs?” [Murtha] said. A Washington Post analysis of Murtha’s earmarks, however, shows that his job promises often come up short. Of 16 local companies the congressman has helped win federal earmarks, 10 have generated far fewer jobs than forecast, and half of those already have closed operations in his district. Murtha’s strategy yielded some successes too. Four firms have expanded dramatically with the aid of earmarks, notably Concurrent Technologies Corp., which after more than a dozen years of earmarks has grown to employ 800 in Johnstown and now wins competitively bid contracts.

The Post analysis illustrates the fleeting success of some of the companies backed by earmarks. Some of the jobs generated by Murtha’s earmarks cost about $2 million each, and scores disappeared as soon as projects were completed.

“Jobs & the economy” is the number one issue cluster on just about everybody’s polling.  Critz’ big pitch on the jobs issue was that he was Mr. Earmark Man, a baby Murtha.  Unless I’m mistaken, this makes Critz “Mr. Assistant Incompetent Earmarker”.

Two million bucks a job?  That’s a great TV ad line.

A lot of people will tell you that questioning the premise is a losing strategy.  However, I don’t see any other way around it.  If jobs is the #1 issue, and Critz is perceived as having helped obtain jobs, it’s going to be a tough to go against that.

Questioning the premise is a risky gambit.  If however, this perceived strength can be turned into a weakness, a Republican win is going to be a lot easier to come by.

(see also: Moe Lane on this issue.)

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June 7, 2010 at 11:29 am Comments (0)

PA-4: What if Mary Beth Buchanan held a press conference…

and the majority of the local press apparently didn’t think she said anything newsworthy?

Buchanan promised a “significant campaign announcement”, which turned out to be simply an accusation that her GOP primary opponent Keith Rothfus voted as a Democrat throughout the 1990s. Interestingly enough, county election officials promptly refuted that claim:

Republican congressional candidate Mary Beth Buchanan accused her primary challenger Friday of voting as a Democrat throughout the 1990s, but election officials said the data she used is unreliable.


At a news conference this morning outside the County Office Building, Downtown, Buchanan’s aides handed out a printout of Rothfus’ voting history. The printout shows that Rothfus registered as a Democrat in 1990 and voted in 18 elections as a Democrat before voting in the 2004 general election as a Republican.

“What I learned is that (Rothfus) wasn’t just trying to hide his lack of experience, but that he was hiding that he was a registered Democrat for 13 years,” Buchanan said.

But Mark Wolosik, head of the Allegheny County Elections Department, said the party history data is unreliable because the county switched computer systems in August 2003. Whatever party the person was registered as at that time was assigned as the party for all previous elections.

WPXI reported this announcement as well, but at last check KDKA, WTAE, and the Post-Gazette didn’t mention this “significant campaign announcement” at all.

Not that they’re, of course, the only local media.

Cross-posted to Renner’s Here.

Update: Tim McNulty of the Post-Gazette advises that he did indeed write a blog post and a regular article on Buchanan’s press conference.

May 15, 2010 at 1:33 am Comments (0)

PA-12: More on Critz’ highly elastic claims

Continuing on this post, discussing the latest ad from the Critz campaign, and the very, very indirect attacks on Tim Burns. The claim:

Tim Burns laid off his own workers in PA, and got tax breaks for outsourcing

Critz’s camp cites this article from the Pittsburgh Business Times to show Burns’s “indifference” to the prospect of layoffs at the company he founded. The “incriminating” quote:

Tim Burns, TechRx co-founder and vice president of product innovation, said the transaction is good news for the company and its investors. He said there may be a few layoffs in Pittsburgh because of consolidation of like business units, but he doesn’t expect a major staff reduction.

“NDC acquired the business because they like what we’re doing, not to completely disrupt it,” Mr. Burns said.

It’s worth noting also that any layoffs would have been done by the buyer NDC, and not by Tim Burns himself.

This article in the Post-Gazette, also cited by the Critz campaign as “proof” of Tim Burns-related job losses in western PA, reads as follows:

According to 2003 filings with the Securities and Exchange Commission — first researched by the DCCC — by NDC Health, the company that bought TechRx, the merger resulted in the elimination of 58 management jobs companywide. It’s unclear how many of these jobs were in Western Pennsylvania, as the company had operations in Atlanta; Dallas; Birmingham, Ala.; Rockville, Md.; and Vancouver as well, Burns campaign spokesman Kent Gates said. But Gates, though he didn’t have specific figures, said the operations in Moon near the Pittsburgh International Airport actually grew after the merger.(Emphasis added.)

The last claim, that Burns personally benefitted from outsourcing jobs, is supposedly shown by this article from The Hill:

Burns was an executive at NDCHealth Corp. from January to June 2003 after the company bought his start-up business, TechRx.

NDCHealth coordinates the flow of information between pharmacies, insurance companies, doctors and hospitals, according to a company release. It does business internationally and during the time Burns worked there the profit it made overseas was classifies as a “deferred tax liability.”

In 2003, the company took in close to $407 million in revenue in the United States and $21 million abroad, according to its Securities and Exchange Commission filing. It paid a total of $1.55 million in taxes — 40 percent of which was at the foreign tax rate of 1.2 percent as opposed to the 35 percent federal statutory rate.

Democrats argue that this means Burns was condoning the use of a tax “loophole.”

This accusation is more plausible than the others at first glance, but like the claim that Tim Burns himself laid people off, it’s faulty unless Tim Burns can be blamed for absolutely anything that NDC did. Two details worth noting here:

  • There’s no hint that what NDC did was illegal. Tax mitigation strategies do not constitute tax evasion, and in my opinion it’s foolish to blame a corporation (or an individual, for that matter) for minimizing their tax burden. If it’s in fact too easy to classify income as “foreign”, then the burden is on Congress to fix that, as they’ve done before with other “loopholes”.
  • The Pittsburgh Business Times article linked above mentions this fact: “NDCHealth plans to acquire the remaining interest in TechRx in May 2003 if certain business objectives are met.” Given that and the fact that Tim Burns left the company in June 2003, it seems far more likely that he was overseeing details related to the merger than planning tax mitigation.

The substance of these claims is further refuted by this letter from a former employee of TechRx, the company that Burns founded:

I don’t know where Mark Critz is getting his information about Tim Burns, but people need to know that a lot of it is just plain WRONG.

I worked for the company that Tim Burns started, and I never saw any form of outsourcing to foreign companies. In fact, when I started at TechRx, there were fewer than 30 employees; by the time I left in 2002, the company had grown to more than 400 employees. Tim sold the company to the larger corporation that helped fund that growth. And that “growth” meant jobs for Pittsburghers!

Eight years have passed since I left Tim’s company and I am still working on and supporting “his” software at another company (a mail service pharmacy that is a former client of Tim’s pharmacy software company). In fact, Tim’s statement that he created 400 jobs is actually an understatement because many more jobs resulted, both from the sale of the company and the sale of the source code to former clients.

Tim is a person of high integrity and knows what it takes to build businesses and create jobs. He is the kind of intelligent, non-career politician that we need in Washington to begin to change the irresponsible overspending and redistribution of wealth mentality that exists there now. If I lived in his district, I would, without a doubt, vote for him.

Dr. Diana L. Repack (and Dr. William F. Repack)

Former TechRx employee (1998-2002)

Moon Township, PA

Cross-posted to my own blog.

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May 10, 2010 at 12:11 am Comment (1)

PA-12: Is Mark Critz a fan of Spandex?

Mark Critz seems to have an affinity for Spandex, with the stretching claims he makes in this ad.

Looking at this a claim at a time:

Burns wants to privatize Medicare and Social Security

Critz’s claimed sources for this? The fact that the House Conservatives Fund has endorsed Burns, and Burns’ claims in a candidate forum on April 28.

This is dubious as a source in the first place, and Critz doesn’t even try to claim that Burns explicitly endorsed everything the HCF stands for. But suppose Tim Burns gave up thinking on his own entirely, and taken every single position of his directly from this organization endorsing him? Here’s what the House Conservatives Fund’s own website has to say about Social Security. Doesn’t sound like privatization to me:

House conservatives tend to understand that Social Security provides a critical foundation of income for retired and disabled workers. Social Security is safe for today’s seniors. However, the government does not save our Social Security taxes for future retirees. Congress borrows this extra money and uses it to make up for deficits elsewhere in the budget. Thus the Social Security trust fund contains nothing but IOUs the government has written to itself. For this reason, House conservatives should be encouraged to act now to seriously investigate long-term, structural reforms to Social Security.

And on Medicare:

Improving our nation’s health care system is a priority for all American families. House Conservatives support competitive reforms designed to lower costs and ensure quality access to care. Policies that will increase competition and individual choice in the healthcare marketplace are essential in achieving greater efficiency and eliminating the rising costs of healthcare. It should not be the goal of government to subsidize health care but to seek solutions that will reduce the costs of procedures, consultations and medications.

Medicare is a vital program for America’s elderly and disabled citizens. We believe in working hard to secure the program’s future while strengthening the program to better meet the changing needs of today. House Conservatives are committed to securing adequate and affordable health care for seniors while stabilizing the burden placed on the American taxpayer.

As for the April 28 forum? Here’s the specific question Critz is alluding too, and Burns’ answer. You be the judge if he supports privatization.

More to follow on the other claims made in this ad.

Cross-posted to my own blog.

UPDATE(10:07PM): Critz also claimed that Tim Burns wants to “cut guaranteed benefits“, citing the same sources. As with the claim of privatization made above, the sources don’t support that claim.

May 9, 2010 at 9:48 pm Comments (2)

Post Gazette Endorses Burns and Bucchanieri in the PA-12 Primaries

From yesterday’s editorial page. The key stuff:

Mr. Bucchianeri sees his lack of a government career as a plus and believes he can bring new energy and fresh perspective to the office. While both candidates were well-informed, Mr. Bucchianeri was direct and straightforward in his answers, while Mr. Critz, on controversial topics, was hedged and cautious. Ryan Bucchianeri may be the underdog in this matchup, but he has earned the Post-Gazette endorsement.

On the GOP primary:

Mr. Burns has the backing of party officials in the primary and is advertising heavily to make his candidacy known. Mr. Russell, at last report, raised more money but is waging a less visible campaign. That suggests Tim Burns would make a stronger candidate for the party in the fall, and on that basis he has earned the Post-Gazette endorsement.

I’d add too that Burns was chosen over Russell by almost 2/3 of the GOP conferees from PA-12, all of whom reside in the district.

Cross-posted to my own blog.

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May 5, 2010 at 5:50 pm Comments (0)

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