Study claims gov’t underestimated the benefits of opening federal lands to drilling

Michael Bastasch | Contributor

A new study finds that the benefits of opening more federal lands to oil and natural gas drilling would produce vastly more economic benefits and tax revenues than previous government estimates show.

The Institute for Energy Research released a study by Dr. Joseph Mason, a professor at Louisiana State University, in response to a Congressional Budget Office report from August that analyzed the benefits of opening up federal lands and waters that are restricted by law or administration policy from leasing.

“Even conservatively estimated, the economic effects of allowing access to U.S. energy resources are significant,” Mason told reporters over the phone.

The CBO found that opening up federal lands would generate a total of $7 billion in revenues during the first decade — $5 billion from ANWR and $2 billion from areas of the outer continental shelf. The CBO projected revenues from opening more lands to be between $2 billion and $4 billion from 2023 to 2035.

However, the CBO estimates are low because they only take into account revenues raised from leases and ignores the wider economic impacts on the economy from opening more lands, this new study claims.

“I analyze a short-run scenario [seven years], which encompasses the next seven years. In the short-run we’re not extracting oil and gas, but of course… the lands that haven’t been explored in thirty years will be explored,” Mason said. “That will employ scientists and that will employ other workers on site to undertake the exploration. They’ll bring those wages home, their families will spend those wages, that will feed jobs, wages, tax revenues throughout the economy, and all of this is ignored by the CBO.”

“In the long-run, when you get to the extraction phase, the effects are even greater,” he added.

Mason found that opening up more federal lands would generate as much as $24 billion annually in taxes over seven years for the federal government in addition to lease revenues estimated by the CBO. In the long-run, $86 billion annually would be generated in federal taxes from more activity on federal lands and in federal waters.

States and local governments would see huge gains in tax revenues as well — $10.3 billion annually over the next seven years and $35.5 billion annually after that.

Tax revenues are only tip of the iceberg, according to the IER study, as drilling would increase the size of the economy by $14.4 trillion over the next thirty-seven years — $127 billion per year for the next seven years, and the economy would grow $450 billion annually after that. This includes “spill-over” effects from economic gains in one area spilling over into another.

The study also found that there would be job growth from opening more federal lands, including 2 million new jobs over the next thirty years — with 552,000 being created annually in the next seven years. According to the study, many of these jobs gains would be seen in high-wage and high-skill occupations like health care and education. Wage increases would total $3.7 trillion over the next thirty-seven years, with $32 billion in annual wage increases during the first seven years.

“Continuing to downplay the reality of the economic value of these resources just ignominiously prevents the intelligent debate of the energy industry’s place in the U.S. economy, detracting from real solutions to energy policies, including both energy independence and energy conservation,” Mason said.

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