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The Economic Effects of Unlocking Federal Lands

The Institute for Energy Research released a study titled, “The Economic Effects of Immediately Opening Federal Lands to Oil, Gas, and Coal Leasing,” by Dr. Joseph Mason, a professor at Louisiana State University and a Senior Fellow at the Wharton School of the University of Pennsylvania. In the study, Dr. Mason assesses the economic benefits of expanding development of oil, gas, and coal resources on federal lands.

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While headlines have reported declining oil, gas, and coal prices, those declines do not deter from the fact that U.S. energy resources are valuable to our domestic economic growth. The most recent government estimate of those benefits was a 2012 Congressional Budget Office (CBO) study, produced at the request of the House Budget Committee, which analyzed federal lease revenues that could be expected to arise from a proposal to open federal lands and waters to oil, gas, and coal extraction.

Specifically, the study aimed to estimate the fiscal benefits of opening 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 past several years, having been discussed 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.

This paper highlights the continuing economic effects despite recent price declines, including benefits to economic growth, wages, jobs, and federal, state, and local tax revenues, from opening federal lands and waters to oil, gas, and coal leasing.

Key findings from the study include:

  • GDP would increase by $127 billion annually in the next seven years, and $663 billion annually in the next thirty years
  • $20.7 trillion cumulative increase in economic activity over the next thirty-seven years, simply by allowing Americans to go to work producing energy
  • 552,000 jobs would be created annually over the next seven years, with 2.7 million jobs annually over the next thirty years
  • $32 billion increase in annual wages over the next seven years, with a cumulative increase of $5.1 trillion over thirty-seven years
  • The federal government would receive an additional $3.9 trillion in federal tax revenues over thirty-seven years, while state and local tax revenues would rise by $1.9 trillion over the same time period.

Click here to read the full report.

Click here for the executive summary.

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  • mulp

    How many trillions in government subsidies would be required to create the profit needed to pay workers more than the minerals mined from Federal land generated in revenue?

    Or would the Federal government return to buying everything produced that the market would not buy at a modest business profit in excess of labor costs, putting the refined minerals in government warehouses like we did after WWII especially to ensure the US economy could survive the needs of another war like WWII?

    Federal incentives were provided to get a rare earth mining and refining operation restarted 8 years ago, but now the owners are going bankrupt again, just like they did when China decided to take total control over the rare earth metals market by strategically ensuring full production no matter the actual market demand.

    This reminds me of the just completed budget deal that pays for spending by forecasting $70 oil in 2024 when oil will be sold from the SPR, when it’s more likely oil prices then will be more like $30 a barrel.

    Conservatives have promoted US economic policies that favor importing refined materials at prices less than the labor costs to produce them in the US. Conservatives then call for legalizing killing and harming people to cut labor costs. Followed by all sorts of tax dodge subsidies to make money losing production profitable.

    The decline in resource production in the US is not due to too little access to pillage and plunder Federal land. The decline is due to the market cutting demand for minerals mined in the US. Even when using tax dollars to buy metals, conservatives argue the government should buy from Chinese workers because they are cheaper. But because they earn less, they buy very little that is produced by American workers. Thus American workers pay taxes to pay Chinese workers instead of American workers.

  • John Dowd

    How about letting good old fashion capitalism (freedom) work for a change. The energy producers will bid for leases and the Federal and States get windfall tax revenue. The energy producers will either make a profit or not based on their due diligence. Everybody wins except the perennial “Dogs-in-the-Energy-Manger” nut cases.

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