The Congressional Budget Office is vastly underestimating the potential revenue that could be achieved by opening more federal lands to oil-and-gas drilling, according a report released Tuesday by the Institute for Energy Research (IER), a conservative think tank. ...
Obama’s plan to avoid the $85 billion of government-wide cuts scheduled for March 1 will likely include ending subsidies awarded to the oil-and-gas industry. Obama and supportive Democrats have said nixing those incentives would save the government $40 billion through 10 years.
But oil industry lobbyists have said the industry’s incentives should not be singled out, saying many other businesses are given deductions and cost-recovery mechanisms. The oil industry also said removing the incentives would stymie domestic energy production.
In all, the IER study said expanding drilling on public lands and waters would increase gross domestic product by $127 billion annually for the next seven years, and $450 billion annually through the following 30 years. It also would boost federal tax revenues by $2.7 trillion through 37 years, the study found.
That paints a different picture than the August CBO report, which said lifting drilling bans would bring in about $7 billion through the next decade, mostly through selling exploration leases.
I don't want to be a jerk, but I'm always skeptical when a study touts something like this:
Job gains would be felt in high-wage, high-skill employment like health care, education, professional fields, and the arts.
I enjoy a good multiplier story just as much as the next guy (in this case "RIMS II final output multipliers" = 2.4 for the U.S.), but how do we know the arts will benefit? Do the oil and gas guys plan to donate 5% of their additional income to the New York arts scene?
Also, I prefer a benefit-cost analysis to an economic impact analysis, especially at the national level. Economic impact studies consider costs of production (i.e., something a business firm would like to avoid) as benefits and doesn't consider environmental costs as a negative part of the activity.