Posted June 30, 2015
Wood Mackenzie’s study comparing the effects of pro-development energy policies with those of regulatory-constrained energy policies is really not much of a comparison at all. Pro-development policies would boost U.S. domestic energy supplies and job creation while benefiting American households, the study found. Pro-development policies also would add to economic growth and generate increased revenues for government. Let’s look at those today.
First, the key comparisons in Wood Mackenzie’s study in one chart:
Across the board, pro-development energy policies – increased access to energy reserves, regulatory and permitting policies that accelerate energy production and energy exports that would stimulate more domestic production – produce positive results for America. Meanwhile, the study found that a regulatory-constrained approach would produce negative outcomes.
In terms of economic growth, Wood Mackenzie says a pro-development approach would result in an increase of $443 billion in annual GDP over baseline growth by 2035 – tracked with the light-blue line in the chart below:
The chart also shows that a regulatory-constrained approach would result in a decrease of $133 billion in annual GDP below the baseline by 2035 (gray line). The difference between the lines: $576 billion in GDP by 2035.
These charts show the GDP impacts distributed over the oil and natural gas industry’s upstream (light blue), midstream (yellow) and refining (red) sectors compared to projected baseline growth (line). On the left, growth over the baseline out to 2035 with pro-development energy policies. On the right, below-baseline performance with regulatory-constrained policies.
Now let’s look at revenue generated for government, where there’s a similar story. With a pro-development energy approach, growth in oil and natural gas activity will generate an increase of $122 billion in total revenue for government over the baseline by 2035. Wood Mackenzie says the regulatory-constrained path will result in a decrease of $18 billion under the baseline by 2035 – a difference of $140 billion. Over the 2016 to 2035 period, pro-development policies will produce a cumulative increase of $1.08 trillion, while the regulatory-constrained path will result in a decrease of $500 billion. The difference between the two for America: $1.58 trillion.
The charts below show the tax revenue impacts over the upstream, midstream and refining sectors. On the left, pro-development policies result in revenues for government well above the baseline. On the right, regulatory-constrained energy policies result in revenues under the baseline.
The pictures here are clear: Pro-development energy policies would be good for the economy and good for government in terms of generating tax income – revenues to help fund the nation’s critical needs. America needs the economic growing power of safe, responsible oil and natural gas development that would be fostered with a pro-development policy approach. This would generate more revenues for government to fund our broad priorities.
Conversely, we can’t afford the negative effects of regulatory-constrained energy. That self-limiting path would needlessly squander economic growth and tax revenues for government, impacting virtually every person in this country.
Those are the contrasting choices before U.S. voters as the 2016 election approaches. We need to elect leaders who understand these choices and will pursue policies and actions that support responsible, beneficial energy development.
ABOUT THE AUTHOR
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.