By Harry Alford
2:08 PM EST, March 6, 2013
With many important issues before the Maryland legislature this year, it is a shame to see time and effort being wasted on unnecessary proposals regarding natural gas development in our state. Pursuing such legislation right now is putting the cart before the horse — and could have a significant negative impact on our economy and efforts to create new jobs.
Let's look at the facts. Today, there is no natural gas development under way in Maryland. In fact, there currently is a moratorium on gas development in place until summer 2014, due to an executive order signed by Gov. Martin O'Malley. He tasked Maryland's departments of Natural Resources and Environment with a three-year study on natural gas development in the state. Governor O'Malley also created the Governor's Marcellus Shale Advisory Commission to incorporate experts and stakeholders into the state's decision-making process. The state agencies have only just started their work on behalf of the commission to determine Maryland's potential resources and an appropriate regulatory response.
These studies need time for completion, and we shouldn't be putting pressure on the state to leap to conclusions first.
Another point of contention in Annapolis is around the funding of the study. Anti-development proponents argue that the state should tax potential investors on well leases that may never be used — preposterous, unless the goal is to run all investors to West Virginia, Ohio or Pennsylvania, where regulations are clear and incentives for development are in place. Instead, the study should be funded by the state and viewed by regulators and legislators as an initial investment that will help determine the best regulatory path forward toward making Maryland a national leader in promoting energy independence.
Our nation has benefited greatly from recent discoveries of huge natural gas deposits such as the Marcellus shale, which runs from New York through Western Maryland to Virginia and West Virginia. The discoveries, plus technological breakthroughs that allow the extraction of natural gas from shale via hydraulic fracturing, have sent natural gas prices to their lowest points in years. Not only are we benefiting from lower prices, but also this resource could mean that the United States could once again become an energy exporter, helping to balance our trade and lessen reliance on energy sources from unfriendly parts of the world.
In 2010, more than 40 percent of all natural gas consumption in Maryland was for residential use, meaning that Maryland consumers directly benefited from these plummeting natural gas prices that are the result of increased U.S. shale gas supplies.
We already benefit from natural gas indirectly through low prices. And Governor O'Malley has touted Dominion's proposed expansion of its Cove Point liquid natural gas plant in Lusby as a major potential job creator to process gas from other states. Dominion plans to invest $2 billion in the plant in the coming years, which could create thousands of new jobs for Marylanders.
With so many benefits to our state, no immediate risks and a state study process just beginning, legislative efforts under way regarding natural gas are clearly more ideological in nature than substantive. Unfortunately, the consequences of legislative action for Maryland consumers could be both substantive and costly.
A number of elected officials, including potential gubernatorial candidate Del. Heather Mizeur, have introduced anti-natural-gas measures in an attempt to bog down the state from setting up a regulatory system for energy development that has not yet begun. Most notable is legislation that seeks to impose a 15 percent severance tax, which is an exorbitantly high rate, on a resource that we're not yet sure is feasible in Maryland. These blind anti-gas policies set a dangerous precedent for other states, where development is under way. Maryland has nothing to gain by diminishing or interfering with the shale gas boon elsewhere.
Simply put, the premature debate over natural gas is a waste of the legislature's time and our state's resources. Legislators should allow the Governor's Marcellus Shale Advisory Commission to finish its report and make informed decisions based on the potential for natural gas production in our state.
Harry Alford, a Maryland resident, is the president, chief executive officer and co-founder of the National Black Chamber of Commerce. His email is email@example.com.
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