March 18, 2013

Energy Production Benefits By The Numbers

Guest column submitted by U.S. Senator Mike Crapo

The Institute For Energy Research (IER), which researches functions, operations and government regulation of global energy markets, recently released a report titled "Beyond the Congressional Budget Office:  The Additional Economic Effects of Immediately Opening Federal Lands To Oil and Gas Leasing."  The study reiterates that expanding domestic energy sources could immediately create millions of jobs and generate billions in revenue to reduce our federal debt, while also furthering our energy independence. 

In the study, Dr. Joseph Mason of Louisiana State University and the University of Pennsylvania's Wharton school analyzed data from the Congressional Budget Office and the U.S. Department of Energy.  In his findings, Dr. Mason demonstrated that opening federal land to production "would lead to broad-based, lasting economic stimulus" that could "help break the U.S. economy out of its sluggish post-recession malaise without any increase in direct government spending."  IER reported the following benefits that would result from immediately opening federal lands and waters to oil and gas leasing:

  • $127 billion annual Gross Domestic Product (GDP) growth for the next 7 years;
  • $450 billion annual GDP growth in the long-run;
  • $14.4 trillion cumulative increase in economic activity over the next 30 years;
  • 1.9 million jobs annually over the next thirty years, particularly among high-wage, high-skill sectors like education, health care, professional fields, and the arts;
  • $3.7 trillion cumulative wage increase over the next 30 years;
  • $2.7 trillion in federal tax revenues over the next 30 years, with $24 billion in annual federal tax revenues over the next 7 years, and $86 billion thereafter;
  • $1.1 trillion in state and local tax revenues over the next 30 years, with $10.3 billion annual state and local tax revenues over the next seven years and $35.5 billion annually thereafter.

An obvious lesson of America's energy situation is that the U.S. must not become overly reliant on one form of energy, and we must be as conservative, efficient and as careful in the utilization of our energy as possible.  A successful national energy policy should be shaped like a financial portfolio made up of many different energy sources.  However, our economy is highly dependent on petroleum, and development of our own oil and gas resources, without compromising necessary health, safety and environmental standards, is a necessary part of a successful energy strategy.  With this in mind, I have supported efforts to increase the utilization of North American resources, including expedited permitting for oil and gas leases on federal land and permitting the construction of the Keystone XL pipeline to transport Canadian crude oil to refineries in the U.S.  Affordable electricity and transportation fuels are critical components of a healthy and robust economy in the United States, and we are fortunate to have tremendous energy resources here at home.

With our national debt topping $16 trillion, the potential of our domestic energy sector must not be overlooked when seeking ways to grow our economy and reduce our budgetary shortfalls.  IER reported that opening federal land to energy production could result in an increase of 30,050 jobs over the long-run in the agriculture, forestry, fishing and hunting sectors alone.  We must implement a progressive energy strategy that expands domestic energy sources to best realize these benefits. 

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