Study: Allowing Energy Production on Federal Lands Would Create ‘Broad Based Economic Stimulus’

By Barbara Hollingsworth | December 15, 2015 | 10:15am EST

( – Opening federal lands that are statutorily or administratively off-limits to oil, gas and coal extraction would amount to a “broad based economic stimulus… without any increase in direct government spending”, according to a new study commissioned by the Institute for Energy Research (IER).

It would raise the nation’s Gross Domestic Product (GDP) by $127 billion annually over the next seven years and generate 552,000 jobs, the study found. 

“Wages would increase by $32 billion annually in the short run, with long run annual effects of $163 billion.”

Over the next 37 years, tapping these domestic energy sources would increase the nation’s GDP by $20.7 trillion and create 2.7 million jobs, according to Louisiana State University Finance Professor Joseph Mason, the study’s author. 

Twenty-trillion dollars is about the same size the national debt will be when President Obama leaves office.

“The economic impulses created by opening federal lands and waters to oil, gas, and coal extraction could help…break the economy out of it sluggish post-recessionary malaise…without any increase in direct government spending.

"Rather, increased output would refill national, state, and local government coffers without additional government outlays,” the study found.

“Production on federal lands has lagged significantly behind the private sector,” IER President Tom Pyle said during a conference call with reporters last week. “We know that energy drives economic growth, so when we produce more, we see a better economy.

“And we hear all this talk in Paris about de-carbonizing the global economy, we hear presidential candidates like Bernie Sanders introduce legislation called the Keep It InThe Ground Act, which in essence would mean that there would be no production on federal lands.

“And so we’re here to show that these policies have consequences, real consequences,” he said.

Those consequences include forgoing the “broad based economic stimulus” that fossil-fuel production on federal lands would deliver as well as imposing massive “switching costs” that would be needed to power the national economy with alternative sources of energy, Mason noted.

“So the point here is that with a full economic analysis of energy, we have to admit that we would be willing to forgo $20.7 trillion in GDP over 30 years, 81 million jobs, $5.1 trillion in wages, $1.9 trillion in state and local taxes, and $3.9 trillion in federal taxes," Mason said.

"Forgo those amounts before trying to make those up in other energy sectors, and of course maintain other economic growth throughout the economy in the meantime.

“So this talk in Paris of switching to different energy sources embeds in it a lot of very complex switching costs which need to be completely taken into account, and I hope that this study fills a void in that analysis.” he said.


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