Tax Revenues From Offshore Energy Will Benefit States, Studies Find
Posted November 19, 2018
As we wait for the Trump administration to unveil the next federal offshore leasing program, which will guide offshore natural gas and oil development the next five years, new studies affirm what we’ve been saying about the economic boost outer continental shelf (OCS) leasing could give to coastal states – in the form of cumulative tax revenues over a 20-year forecast period. By the numbers:
- Florida: $2.5 billion in cumulative tax revenues from offshore leasing (includes both the Atlantic OCS and Eastern Gulf OCS)
- North Carolina: $2.56 billion
- Virginia: $1.57 billion
- South Carolina: $1.51 billion
- Georgia: $212 million
The new reports titled, “The Economic Impacts of Allowing Access to the Atlantic OCS and Eastern Gulf of Mexico for Oil and Natural Gas Exploration and Development” project state, local and federal tax receipts. They were prepared for API by CALASH and estimate that offshore-related activities could generate additional non-bonus and royalty revenue such as personal and corporate income tax, property tax and sales taxes.
According to the studies, cumulative state, local and federal tax revenues from Atlantic OCS natural gas and oil development are projected to total almost $85 billion across the forecast period:
Cumulative total tax revenues from energy development on the Eastern Gulf OCS (which also includes Louisiana, Texas, Alabama and Mississippi) are projected to total more than $40.5 billion over the forecast period.
Individually, each state is looking at the potential for big numbers and big benefits across the entire state. They follow studies earlier this year finding that through offshore leasing these states together could see billions in projected industry spending and the creation of hundreds of thousands of jobs.
Safe and responsible offshore development is possible thanks to advanced technology, industry safety standards and best practices and regulations that protect the environment, marine life and workers. These allow industry to work safely alongside recreational fishing, tourism and military activities.
Reaction from the states:
David Mica, Florida Petroleum Council:
“The projected tax revenues outlined in this new study of potential federal offshore oil and natural gas production and activity could mean substantial investments in Florida such as in areas like education and opportunities to rebuild infrastructure. This opportunity to inject $1 billion in increased state and local revenues, coupled with the additional billions of dollars for the economies of coastal states from previous studies, is critical for any plans to help improve quality of life for Florida’s residents and the overall future of the state.”
David McGowan, North Carolina Petroleum Council:
“This new study is proof that the tax generating benefits of federal offshore activity could be a huge benefit for investments in our children’s education, offsetting college tuition increases, and rebuilding infrastructure throughout the state.”
Miles Morin, Virginia Petroleum Council:
“The potential tax revenues shown in this new study could be a major boost for investments throughout the state, in areas such as education and rebuilding infrastructure. This opportunity for over $1 billion in increased state and local government revenues, coupled with the additional billions of dollars from potential investment in the economies of coastal states from previous studies, is critical for helping to improve quality of life for Virginia’s residents.”
Mark Harmon, South Carolina Petroleum Council:
“This new study on the tax generating benefits of offshore activity underscores the fact that the opportunities for growth in South Carolina are exponential at a time when we can use additional economic improvements, investment, and job creation. The path forward is clear, year-round revenue streams and high-paying jobs from safely tapping natural gas and oil reserves in federal waters off America’s Atlantic coast are the right choice for South Carolina. These revenues could be used to alleviate the burden of property taxes, offset college tuition increases, and rebuild state infrastructure. We can’t overstate the benefits this rare opportunity could provide.”
Hunter Hopkins, Georgia Petroleum Council:
“Cutting-edge technology can safely and accurately discover what resources lay off Georgia’s coast and make possible the potential for millions of dollars in state and local tax revenues from offshore activity detailed in this new study. This could be a turning point for Georgia. Our communities could gain high-paying year-round jobs while additional revenues help advance and update our public school systems and infrastructure.”
Learn more at Explore Offshore, and check out this podcast featuring Explore Offshore national co-chair Jim Webb discussing the benefits of offshore 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. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. 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 have two grown children and six grandchildren.