The Congressional Budget Office (CBO) recently released a report detailing the many ways in which expanded oil exploration and drilling in federally protected areas would not yield an overall economic benefit for the United States. The CBO report says that the revenue generated by these operations would take too long to come to fruition, and that our current areas of drilling are where the real money is in this situation.
But the dirty energy industry will never go down without a fight, so they had their friends at the Institute for Energy Research (IER) fund a study that showed that the CBO was way off the mark with their estimates. IER has received funding from both Exxon and Koch Industries.
The IER report, prepared by economist Joseph Mason at Louisiana State University, says that the CBO estimates of potential revenues from increased oil and gas drilling in currently protected areas are being under-reported to thwart new leasing. It is worth noting that Mason’s employer, LSU, received a $125 million gift from an aging oil executive in the early 1980s.
While the CBO estimates that expanded leasing would generate roughly $4 billion in additional revenue per year, at best, IER says that the real amount of revenue we can expect is about $35.8 billion. On top of that, IER claims, the United States would see a boon of close to $100 billion in the long run from allowing oil companies to pillage our public lands and waters.
The Washington Times reported the following on the conflicting reports:
CBO estimated that ANWR leasing would generate about $5 billion over the next 10 years, with 90 percent going to Alaska under current law. Between $2 billion and $4 billion a year in royalties from 2023-2035 would be split between the state and Washington once production gets underway.
Another $2 billion annually could be expected from additional leases in OCS waters that are not currently open, CBO said. It estimated annual royalties ranging from tens of millions of dollars a year to a few hundred million dollars a year, because of the uncertainty about whether production would take place on the leases.
Mason estimated that beyond the additional tax revenues generated by new leasing and development, total economic output would range from $127 billion annually to $450 billion annually during production, or about 3.2 percent of gross domestic product. Mason estimated job creation at about 552,000 jobs annually for the first seven years and two million jobs annually after that.
The numbers put forth by the IER certainly seem a lot more promising than those of the CBO, and there’s a reason for that – CBO counted revenue that would flow to governments by leasing the lands. IER included calculations of overall economic benefits – two completely different calculations.
Furthermore, both IER and the CBO failed to take into account the potential economic harm that would result from an oil spill, a number that could quickly make all future economic gains from the venture null and void.
If IER’s numbers were accurate, they could easily make the pitch to the government that their plan is worthwhile and would generate revenue for the government (while pocketing some hefty profits for themselves in the process).
The problem is that IER has an enormous credibility problem, in that they have absolutely no credibility at all.
Time after time, IER has fabricated numbers related to dirty energy jobs, fabricated estimates on oil production and prices for consumers, and they have even gone as far as to publish error-filled anti-clean energy “research.”
So for their new “report,” we have to question whether or not the oil-funded group had their oil-funded author fabricate the information on jobs and economic output, because their track record immediately calls their claims into question. On top of that, IER has much to gain from getting their corporate benefactors access to federally protected public lands, while the CBO has no financial interest in the matter.
Given IER’s history of distorting reality, their new report should be viewed with a highly critical eye. After all, their industry funders have the most to gain by misrepresenting how much oil is sitting beneath the United States’ soil.