A Natural Gas Severance Tax—An Economic Analysis

摘要

This study estimates the economic effects of a severance tax on the market for natural gas produced from shale sources using non-conventional extraction methods, such as horizontal drilling and fracking. Results suggest that a severance tax of 5 % would increase the price of natural gas by as much as 3.82% and decrease gas extraction by an estimated 1.16% to a value of 9.52%. If applied to the Commonwealth of Pennsylvania in the United States, a 5% severance tax is estimated to raise between US $443 and $486 million per year in public revenue. The marginal deadweight loss associated with a 5% severance tax is estimated between 1.27% and 12.85% of the last dollar earned.