By Stephanie Catarino Wissman
Natural gas is the cornerstone of Pennsylvania’s energy and economic strength. A vital part of the Commonwealth’s energy mix, natural gas powers millions of homes and businesses, while supporting tens of thousands of jobs, contributing royalty payments to landowners and billions of dollars to the state’s economy every year.
Pennsylvania’s powerhouse natural gas production supports economic growth in all corners of the Commonwealth, even communities without development.
Pennsylvania energy, however, could be a target for some at the state Capitol to raise revenue. Facing significant state budget challenges, including an operating deficit of $4.8 billion in fiscal year 2025-26, Pennsylvania’s economic future could be in peril.
Yet, targeting Pennsylvania energy with new taxes would only make matters worse. This short-sighted approach could undermine one of the Keystone State’s most reliable revenue generators, hurting jobs, the economy and access to natural gas, which half of Pennsylvania households depend on for power.
What Pennsylvania needs are policies that are pragmatic and favorable in the long term, not quick fixes and gimmicks like a severance tax that could make matters even worse.
Pennsylvania’s natural gas industry already pays a unique tax – the impact fee – on unconventional wells that, since 2012, has generated nearly $2.9 billion. These funds have been used for dozens of road and bridge repairs, park and conservation projects, public safety and other community needs, demonstrating how this one-of-a-kind program is working for the benefit of Pennsylvanians.
According to the Pennsylvania Independent Fiscal Office, impact fee collections totaled nearly $240 million in 2025, a 46 percent increase from the previous year.
Simply put, the impact fee is working for Pennsylvanians as intended by the General Assembly.
Despite all this, members in the state House and Senate have proposed legislation that would impose a punitive severance tax on Pennsylvania natural gas production. Comparing Pennsylvania to Texas and other top energy-producing states ignores each state’s tax structures, which are fundamentally different and complex.
For example, although Texas has a severance tax on natural gas extraction, it does not have a corporate or personal income tax. Meanwhile, Pennsylvania drillers pay corporate and personal income taxes in addition to the impact fee.
Basing policy on unreasonable comparisons and skewed data hardly seems wise.
Some present a severance tax as a commonsense solution to the state’s significant budget shortfall. But it’s really a tax-and-spend scheme that could harm Pennsylvania’s natural gas production and may drive up costs for consumers.
At a time when affordability is a top concern for Pennsylvanians, imposing punitive energy taxes is completely out of touch.
As the second-largest natural gas-producing state in the nation, Pennsylvania helps provide the affordable energy that Americans rely on while reducing carbon emissions in the power sector to the lowest levels in a generation. This is Pennsylvania’s energy advantage, and it underscores the importance of pro-energy, pro-growth policies and timely, predictable permitting processes to strengthen it.
That is why a coalition of trade groups, led by the Pennsylvania Chamber of Business and Industry, has sent a letter to Gov. Josh Shapiro and the General Assembly ahead of the governor’s upcoming Fiscal Year 2026-27 budget address. “Pennsylvania’s energy industries provide hundreds of thousands of family-sustaining jobs, attract private investment, and support economic growth across every region of the Commonwealth,” the letter states.
Pennsylvania natural gas production has brought many benefits to the state and nation, including helping to secure America’s energy future and supporting the electric grid with reliable, affordable baseload power.
Building on Pennsylvania’s strong energy economy, not reducing it, can help put the state back on track while helping to address affordability – a win-win for Pennsylvanians.
Stephanie Catarino Wissman is executive director of the American Petroleum Institute Pennsylvania based in Harrisburg, Pa.
