In addition to receiving the largest tax break in Pennsylvania’s history, the Shell ethane cracker also received a 15-year exemption from state and local taxes – which brings up another important factor—the large tax-payer subsidies given to petrochemical companies.

In Louisiana, a statewide program (ITEP) exempts nearly all manufacturing companies from paying property taxes that would support local budgets, leading to decades of disinvestment from schools, local services, and social safety nets. Between 2006 and 2016, an estimated $13 billion was diverted from local governments because manufacturing companies weren’t paying property taxes. The program was changed in 2016 to allow local officials to reject a company’s request for tax breaks, however, in 2020, Governor Edwards backed a process that allows companies to appeal a local government’s decision to the state board.

Despite the generosity of many state governments, there is limited evidence to support that these large tax credit programs are effective.

In addition to tax breaks, ethane crackers often receive funding from public grants and economic development organizations in the public or non-profit sector. For example, Jobs Ohio gave PTT of Thailand and Daelim Industrial of South Korea $30 million for the PTT ethane cracker, and Texas Enterprise Fund granted $1.35 million to SABIC and $5 million to Exxon for the Exxon-SABIC ethane cracker.

Local investments to support the industry

To make up for these large tax breaks, companies may pledge money to make large investments in a state, repair local infrastructure, support colleges, or fund other community projects. Yet this takes power away from local government and into the hands of international corporations whose bottom line is profit, not the public’s well being.

• For example, Shell must invest $1 billion in Pennsylvania as part of its tax credit agreement to build an ethane cracker. Shell has donated $1 million to the process technology program at the Community College of Beaver County near the ethane cracker site. The money will be used to create the “Shell Center for Process Technology Education.” According to the local newspaper, this program is heavily influenced by Shell, and will educate local students to work in the petrochemical industry.

The agreements corporations make with the state are designed to benefit the company’s bottom line, not the public, yet they play a major role in influencing the opportunities available for future generations.

Many of the ways oil, gas, and petrochemical companies invest in our communities —such as an oil rig display in the New Orleans aquarium, or pro-oil K-12 curriculum—are designed to influence the public’s perception and acceptance of them.

Boom and bust

These types of industry investments also make local governments dependent on multinational corporations and throw communities onto a boom-and-bust roller coaster. Communities throughout Appalachia based around coal and steel can attest to the devastating impacts that come when a local economy is based around one company or natural resource, and what happens when that company goes bankrupt or the natural resource is no longer profitable.

Influencing elected officials

But why do those in power choose petrochemicals, when state leaders could choose companies that manufacture renewable energy, reclaim brownfields, or build out our public transportation system?

States like Pennsylvania, Louisiana, and Texas sit above the natural resources that companies like Shell and Exxon require, and as some of the wealthiest corporations in the world, they will engage in all of the lobbying and campaign funding necessary to get what they want.

For example, an investigation by Global Witness found that Pennsylvania representatives who voted for a bill that would provide millions in tax breaks to petrochemical companies (HB 1100) received over six times more campaign funds from the oil and gas industry than those who voted no (learn more about updates on this bill).