Why Did Shell Pick Pa. for its Cracker Plant?
Charleston Gazette
15 March 2012
By Ken Ward Jr.
Today’s announcement by Shell Chemical that it has picked a site
in western Pennsylvania for further “evaluation” for its proposed
natural gas “cracker” plant is already drawing criticism for West
Virginia Gov. Earl Ray Tomblin. Recall that Gov. Tomblin had made
luring this facility to West Virginia a top priority in his State
of the State address earlier this year:
Of course, one of the biggest potential benefits of the Marcellus
Shale development is the opportunity to re-energize manufacturing
in our state. One ethane cracker, by itself, would mean a
multi-billion dollar, multi-year investment in West Virginia with
thousands of construction jobs and hundreds of good paying
permanent jobs … And let me be clear about my intentions. I will
do everything in my power to make sure that West Virginia is
positioned to take full advantage of this opportunity. I will not
limit our efforts to just one project or even two. We will compete
for every project – every dollar of investment and every new job
that relies on the natural resources with which we have been so
blessed.
Of course, the governor has inflated the potential impacts of this
project, while pushing lawmakers to rush through legislation to
give Shell a huge tax break if it picked West Virginia for its
cracker.
Here’s what Shell had to say about how it made its decision to
pick the Pennsylvania site over locations in West Virginia and
Ohio:
Shell looked at various factors to select the preferred site,
including good access to liquids rich natural gas resources,
water, road and rail transportation infrastructure, power grids,
economics, and sufficient acreage to accommodate facilities for a
world scale petrochemical complex and potential future expansions.
Nothing in there about lawsuit abuse, greedy plaintiff lawyers,
stringent environmental regulations or overly demanding union
workers, huh?
Ted Boettner and the other good folks at the West Virginia Center
for Budget and Policy follow state economic development efforts
and tax policy pretty closely. I asked Ted what he made of Shell’s
decision and here’s what he said:
West Virginia offered an almost tax free climate to Shell, but the
state fell short. This tells us that the state’s business tax
climate had very little to do with Shell’s decision to locate in
Pennsylvania. Businesses locate where they can make money. Aside
from this, there location decisions are driven primarily by
proximity to markets and raw materials, a productive and skilled
workforce, and a good quality of life. Taxes are usually a very
small part in the decision process because they represent only a
tiny part of the cost of doing business. This is especially true
of capital intensive industries, which tend to have
disproportionately low tax rates because of tax deductions.
Ted added:
Our biggest policy failure is not making West Virginia a more
attractive place to live, work, and raise a family. This requires
investing in our people, universities, parks, infrastructure, and
other public structures. Without a well trained and educated
workforce, it is hard to compete in a global economy. We have the
smallest share of workers with a post secondary degree in the
country. This should be our focus, not engaging in a race to the
bottom on who can have the low taxes, bad regulations, and a
poorer quality of life.