Excerpted from WSJ: “Drilling for Dollars”, September 12, 2008
Congress … stands to collect a windfall if they drop their ban on offshore oil-and-gas development.
In fact, liberating publicly owned resources could net the Treasury as much as $2.6 trillion in lease payments, royalties and corporate taxes, according to one estimate currently knocking around Capitol Hill. That’s almost a full year of spending even for this spendthrift Congress.
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Already, with the ban in place, offshore development is one of the federal government’s greatest sources of nontax revenue, amounting to $7 billion and change in 2007. Energy companies bid competitively to acquire leases upfront, then pay rents. The feds are also entitled to a royalty on the market value of oil and gas when sold. Corporate income taxes on producer profits add to the bank.
The total government take from leases in the Gulf of Mexico ranges from 37% to 51%, depending on the location of the lease. The take is somewhat higher is Alaska.
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Opening up a small portion of the coastal plain of the Arctic National Wildlife Refuge would generate over $500 billion in government and state revenue. (see article)
The $2.6 trillion estimate, is a back-of-the-envelope calculation from exploiting the 86 billion barrels of oil and 420 trillion cubic feet of natural gas that the Department of the Interior determines are undiscovered but “recoverable” on the Outer Continental Shelf.
We don’t know what’s actually out there because analysis with modern equipment has been forbidden by Congress in many areas for 26 years.
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Since fossil fuels are expected to provide nearly the same share of total energy supply in 2030 as they do today — even with major growth in alternative energy — Washington might as well make a few bucks.
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Full article:
http://online.wsj.com/article/SB122117603688025815.html?mod=opinion_main_review_and_outlooks
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