Carpe Diem

Opening up federal lands to oil and gas production would deliver a powerful economic stimulus to the US economy

Professor Joseph R. Mason, who holds an endowed chair of banking at the Ourso College of Business at Louisiana State University, released a study this month titled, “The Additional Economic Effects of Immediately Opening Federal Lands to Oil and Gas Leasing,” here’s the introduction and some of the key findings:

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

1. GDP increase:

a. $127 billion annually for the next seven years.

b. $450 billion annually in the next thirty years.

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

Note: 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.

2. Job increases:

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

b. Almost 2 million jobs annually over the next 30 years.

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

3. Wage increases:

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

b. $115 billion annually between 7 and 30 years.

c. $3.7 trillion cumulative increase over 37 years.

4. Increases in tax revenues:

a. $2.7 trillion increase in federal tax revenues over 37 years.

b. $1.1 trillion in state and local tax revenues over 37 years.

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

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

Conclusion: The economic impulses created by opening Federal lands and waters to oil and gas extraction could therefore help significantly to spur economic growth — and help break the economy out of its sluggish post-recessionary malaise. Importantly, those benefits would be realized without any increase in direct government spending. Rather, increased output would refill national, state, and local government coffers — currently depleted by the current economic crises — without additional government outlays.

HT: Powerline Blog

10 thoughts on “Opening up federal lands to oil and gas production would deliver a powerful economic stimulus to the US economy

  1. Minor detail, most of the current boom areas have little to no federal land, the Marcellus because the land is in the one of the 13 original states, the Bakken because most of ND is in private hands, the Eagle Ford/Permian basin because Texas retained its state lands when annexed. Possibly the western extension of the Bakken in MT, but other than that there are no hot plays in areas where the federal government has significant land holdings. When making this type of analysis one needs to consider where the plays are in comparision to where the federal government owns land.
    Possible the Montery Shale in Ca but it is not located in the deserts where the big federal tracts are.

  2. Federal Lands are already “opened up” to gas and oil development.

    I think the study needs to be more specific about what lands it thinks are being kept from being developed.

    If we are talking about places like Yellowstone or Yosemite or the Alaskan Lands and this is not a national emergency and we are really talking about just adding to what we already are doing and the advantage of this is what 50K jobs … ???

    Wouldn’t we be better off saving those resources for the times in the future when we may well need them more than now?

    • “If we are talking about places like Yellowstone or Yosemite”

      Yeah, brilliant Larry, we’re talking about national monuments. You left out the spot on Mount Rushmore where the likeness of your hero Obama will someday be carved.

    • Larry, try reading the referenced paper or even just the blog post beyond the headline before you comment.

      Then figure out – somehow – what “…federal land that is currently closed-off because of statutory or administrative action” means.

      Keep in mind that “action” may also include “inaction” in that context.

  3. Federal lands should be opened up for drilling because there are some profitable deposits that can be developed cheaply and effectively. The problem with the analysis is the assumption that much of the increases in oil and gas production are economic and sustainable. They aren’t.

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