Open federal land to energy exploration and development to boost economy

The United States has recently experienced a boom in oil and gas production, but that has occurred almost exclusively on private and state lands. Federal land has been largely closed due to the policies of several administrations.

The American Energy Alliance has a new report “Beyond the Congressional Budget Office” which shows the potential of a more enlightened federal policy in energy development. Here is the executive summary:

While headlines have reported a boom in US oil and gas production, that boom has been related almost exclusively to exploration and development on private and state lands and waters. Even that limited expansion has had profound effects. Opening up Federal resources — in addition to private and state resources — to exploration and development can accelerate all of those trends. But recent administrations have yet to follow through on promises to allow access to Federal resources, instead proposing to levy increased taxes on oil and gas production.

The Congressional Budget Office (CBO), at the request of the House Budget Committee, recentlyreleased an analysis of lease revenues that could be expected to arise from a proposal to open Federal lands and waters to oil and gas leasing (the “CBO Assessment”). Specifically, the proposal aims to open areas that are statutorily or as a matter of administration policy prohibited from leasing. The issue has repeatedly been a hot-button political and economic issue in the last several years, most recently at the beginning of the Obama administration and then again as Republican challengers in the 2012 election placed opening the lands and waters at the center of their energy policy.

But while the Administration cannot shy away from exploring the fiscal benefits of opening Federal lands, the CBO study was restricted to analyzing just one component of those benefits: lease revenues. This paper highlights the larger economic effects, including economic growth, wages, jobs, and both federal and state and local tax revenues, of opening Federal lands and waters to oil and gas leasing, relying solely upon the CBO natural resource and oil and gas price

estimates to show these broader economic effects in order to maintain direct comparability with their analysis. This paper also seeks to “complete” the CBO Assessment by taking measurements of output, jobs, wages and tax revenues into consideration.

The findings of this paper demonstrate that opening federal land that is currently closed-off because of statutory or administrative action would lead to broad-based economic stimulus, including increasing GDP, employment, and wages. Specifically:

GDP increase:

• $127 billion annually for the next seven years.

• $450 billion annually in the next thirty years.

• $14.4 trillion cumulative increase in economic activity over the next thirty-seven years.

These estimates include “spill-over” effects, or gains that extend from one location to another location. For example, increased oil production in the Gulf of Mexico might lead to more automobile purchases that would increase economic activity in Michigan. Spillover effects would add an estimated $69 billion annually in the next seven years and $250 billion over thirty years.

Jobs increase:

• 552,000 jobs annually over the next seven years.

• Almost 2 million jobs annually over the next thirty years.

Jobs gains would be felt in high-wage, high-skill employment like health care, education, professional fields, and the arts.

Wage increase:

• $32 billion increase in annual wages over the next seven years.

• $115 billion annually between seven and thirty years.

• $3.7 trillion cumulative increase over thirty-seven years.

Increase in tax revenue:

• $2.7 trillion increase in federal tax revenues over thirty-seven years.

• $1.1 trillion in state and local tax revenues over thirty-seven years.

• $24 billion annual federal tax revenue over the next seven years, $86 billion annually thereafter.

• $10.3 billion annual state and local tax revenue over the next seven years, $35.5 billion annually thereafter.

Read the full report here.

MasterResource also has a three-part series on this subject:

Part I: Expanding “Depletable” Resources

Part II: Coal Issues

Part III: Federal Land Potential

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