Study finds “significant fiscal and economic losses” for western states under a federal lands fracking ban

Dec 16, 2020

William Allison, Energy In Depth l December 16, 2020

A fracking ban on federal lands like the one advocated by the Biden presidential campaign would severely harm the economies of eight western states, according to a new study by the Wyoming Energy Authority.

The report’s author, University of Wyoming Professor Tim Considine, came to a grim conclusion:

“Over all this study finds that there are significant fiscal and economic losses associated with policies that restrict oil and gas development on federal lands. Advocates of these restrictions argue that these policies are justified because they reduce greenhouse gas emissions. Even if one believes that oil and gas producers around the world do not offset lost oil and gas production from federal lands, the costs of achieving these emission savings is quite high.”

Commissioned by the Western Energy Alliance (WEA) and the New Mexico Oil and Gas Association (NMOGA), the study found that by the end of Joe Biden’s first term, a fracking ban on federal lands would result in $19.6 billion in lost wages, 72,815 fewer jobs annually and $10.8 billion in fewer tax revenues across Alaska, California, Colorado, Montana, New Mexico, North Dakota, Utah, and Wyoming.

Together these eight states produce more than 97 percent of federal onshore production. If enacted, a fracking ban on federal lands would bring this all grinding to a halt. As WEA President Kathleen Sgamma explained:

“A Biden ban would be devasting to the economies of western states by eliminating thousands of jobs just as Americans are struggling to recover from the pandemic. He’s calculating that he won’t pay a political price while satisfying radical climate activists, but he would be sacrificing the livelihoods of thousands of westerners throughout many sectors of the economy.”

Wyoming Governor Mark Gordon agreed, saying that a fracking ban on federal lands would only worsen the state’s budget woes:

“A federal leasing ban would be a serious threat to our state’s economy. The revenue challenges that we currently face would be further exacerbated by any misguided federal policies that unfairly target states with large swaths of federal land.”

In Wyoming, a federal fracking ban would result in more than $300 million in lost tax revenue annually. As Wyoming Energy Authority’s Executive Director Dr. Glen Murrell said:

“Every policy has an impact, and while this study highlights how complicated and in-depth oil & gas development on federal lands can be, it is clear, state-by-state, that this specific type of federal policy has long lasting impacts on State revenues, employment, and economic activities.”

Another state that would suffer severe economic consequences is New Mexico, which ranks first in oil production on public lands and second in natural gas production. The study found that just between 2021 and 2024 a fracking ban on federal lands would eliminate an average of 36,217 jobs each year, resulting in $22.1 billion in lost GDP, $9.8 billion in lost wages, and $6.3 billion in foregone tax revenue.

In New Mexico, oil and gas taxes are a key source of funding for state education initiatives – a point reiterated by NMOGA President Ryan Flynn:

“Our state depends on oil and gas to fund schools, put teachers in classrooms and help our young children learn. With vast stretches of federal land, it is simply impossible to divorce our economic success from land management policy in western states like New Mexico, and funding for education, access to healthcare, and new infrastructure projects are all on the line. We are committed to doing our part to reduce emissions and protect the environment, but we cannot slap thousands of New Mexicans with proposals that destroy jobs and ravage communities.”

Flynn added that any proposal to restrict energy development on federal lands would “devastate” New Mexico and result “in a greater reliance on foreign energy exports.”

A study last year found that a federal fracking ban would wipe out 20 percent of New Mexico’s workforce by 2025, a brutal blow after what has already been a rough year for the industry.

Research has consistently shown that efforts to restrict energy production on federal lands would have significant impacts for the country as a whole. But for these eight states, the individual impact would be devastating – a fact that cannot be disregarded as the future of the nation’s federal energy development is determined under the new administration.

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