Research and consulting firm Wood Mackenzie recently released a startling new report analyzing the devastating economic impact of the nearly $73 billion in proposed tax increases upon the nation’s oil and gas industry. In contrast, allowing access to energy resources currently off limits would provide massive boosts to production, employment levels, and government revenue. Onerous federal regulation currently prevents access to oil and gas reserves in areas of Alaska, the Eastern Gulf of Mexico, and the Atlantic and Pacific Outer Continental Shelves. The difference between allowing access to these vast reserves versus continued regulation and following through with the nearly $73 billion of proposed tax increases could not be more drastic.
Among the report’s most distressing findings were the economic implications the proposed tax hikes would have:
- A loss of nearly 50k direct and 120k indirect jobs by 2014.
- An estimated loss of 0.7 mmboe/d (million barrels of oil equivalents per day) by 2020, with an additional 1.7 mmboe/d put at risk of not being developed. By 2025, they estimated a loss of 0.4 mmboe/d, with 1.2 mmboe/d put at risk
- A temporary and meager bump of $3 billion in government revenue between 2011 and 2015, followed by a long term loss of $10 billion in 2025, with an additional $8 billion possibly at risk.
At a time of unemployment rates over 9%, any increase in taxes on our nation’s oil and gas industry would further hamstring our economic recovery and hopes of energy independence. On the other hand, increasing access to reserves currently off limits would create hundreds of thousands of jobs and spur much needed investment in communities:
- The addition of 50k direct and 120k indirect jobs in 2014. In the long term, by 2025, those numbers would rise to 150k direct and 380k indirect jobs.
- An additional 4.0 mmboe/d brought on line by 2025. Total US production in 2010 was equivalent to 18.8 mmboe/d.
- Greater production would lead to an increase of $20 billion in government revenue by 2020, and $150 billion by 2025.
The juxtaposition illustrated by this data reveals the benefits of increased energy development when compare to tax hikes. In pursuit of more jobs and an expedient economic recovery, Congress would do well to heed this reports advice.