The benefits of opening federal sites to drilling
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.These calculations make sense to me. They can also be to some extent extrapolated from the similar gains in the private sector where the government has not been able to curb the growth. It is weird that Obama claims to be looking for additional revenue, but is not willing to open these areas to energy production which would produce more revenue than tax increases he has proposed while also increasing economic growth. I think he is allowing his carbon phobia to overrule common sense which he claims to be for.
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.