As Governor Wolf plans to announce next week a gradual relaxation of shutdown orders and phased reopening of Pennsylvania, it only adds to the reality of mixed messages that compete for our attention. Public health and safety being foremost in the mind of many, while others seek stabilization of the economy as a prime measure of action. We the people again especially in the rural regions of the state see two Pennsylvania’s. The loudest cries to close came from more populous areas of the state. Philadelphia and surrounding counties indeed had an identifiable crisis, Pittsburgh and Allegheny County followed. Second guessing the statewide shutdown will only be eclipsed by the national debate. But it is clear urban areas of the state seek to dominate the more rural counties. Could many of Pennsylvania counties had a different set of restrictions that would have been less draconian than the total shut down? We are about to experience a reverse test of this opinion as Governor Wolf lays out the next phase of combatting COVID-19. Coming back to energy this division is magnified when it comes to natural gas exploration and production. In Pennsylvania it is historic precedent that land resources, timber, coal, and natural gas, belong to the landowner. Initially Pennsylvania enacted the Impact fee with the intent a good portion returns to local governments. Governor Wolf has consistently demanded a Severance tax, saying everyone in the State should benefit. He fails to recognize that every home in Southeastern Pennsylvania that is heated with natural gas, propane and electric all have had lower heating bills for the last ten years due to the abundance of natural gas. But likely as COVID-19 wanes Wolf will again call for the tax and benefit disproportionately the southeast region of the state. As Pennsylvania navigates into the summer of the virus pandemic, we will wonder how soon we will be back to a sense of normal. The energy news remains sobering. Indeed the OPEC-plus agreed to cut production, Sunday April 13th. But oil producers have to keep their promises, with oil demand off by millions of barrels per oil per day, will they? President Trump promises to pay attention to the agreement and still may as Dan Doyle advocated impose tariffs on imported oil. But the powerful lobbyist group the American Petroleum Institute has expressed opposition to any tariffs which could raise costs for oil refining companies that still import crude, including from Saudi Arabia. Looking forward oil demand is expected to be down for the entire year. There are multiple reasons why the world’s economy may not return to “normal” by the end of 2020. Quoting Nick Cunningham at Oilprice, “One principle reason should be obvious – the global pandemic is not over. The rate of infections in Europe and parts of the U.S. has flattened, but glimmers of hope may be misleading. “Most countries have an overall infection penetration below 5%. The moment the restrictions are relaxed the daily infection rates will spike back up,” Bjarne Schieldrop, an analyst at SEB, reported. “Rather than moving directly to ‘all-back-to-work’ we are more likely moving to ‘semi-lock-down’ and repeated, start-stop moves as governments ease restrictions but must pull back as infection rates increase.” “The second reason, demand may not bounce back is the global economy is in trouble. Just days ago President Trump said the economy would “boom” once the lockdown measures are lifted. But a report from the National Bureau of Economic Research says that U.S. GDP could contract by 11% by year end. The IMF warned that the world is facing the worst downturn since the Great Depression, it is unlike anything experienced in our lifetimes,” Gita Gopinath, IMF chief economist, said this week. “Economic activity may not rebound until a vaccine is available, or a robust system of testing that allows for gradual reopening. There is data showing a hit to regional U.S. economies preceding lockdown orders, evidence that people stayed home and held back spending, fearing the virus. That means simply lifting stay-at-home measures does not return the economy to “normal.” Many people will likely continue to stay home until they feel safe.” Surrounded by mixed messages, this will be our choice in the coming weeks.
top of page
bottom of page