PDF _ RL34547 - Possible Federal Revenue from Oil Development of ANWR and Nearby Areas
23-Jun-2008; Salvatore Lazzari; 12 p.

Update: Previous Releases:
June 23, 2008

Abstract: Recent high petroleum prices, and the related economic burden on consumers and energy-intensive industries, has raised the issue of stimulating domestic supplies of crude oil. One possible source is the coastal plain of the Arctic National Wildlife Refuge (ANWR), which is estimated to contain significant quantities of oil and gas. Interest in developing the ANWR oil resources has also focused on the revenues that the federal government could collect should exploration and development be successful. Some observers have suggested using such revenues for purposes such as providing relief to petroleum consumers, further subsidizing energy conservation measures, or reducing federal budget deficits. However, current federal law prohibits the production of oil and gas in ANWR.

Federal revenues would consist primarily of corporate income taxes on profits earned by oil producers from the production and sale of ANWR oil. As landowner, the federal government would also collect royalties from such production on federal lands, which are included in the estimates. If producers were able to recover 10.3 billion barrels of oil over the life of the properties — the United States Geological Survey has estimated there is a 50-50 chance that the ANWR coastal plain contains at least this amount of oil — and if oil prices are $125/barrel, then the federal government might be able to collect $191 billion in revenues over the production period, estimated to be at least 30 years once production commences. This estimate consists of nearly $132 billion in federal corporate income taxes, and about nearly $59 billion in federal royalties. These estimates are subject to major limitations. Estimates of technologically recoverable oil used in this report include the resources from the federal lands, and assume the availability of resources in Native lands in the Refuge and offshore state lands. The Alaska Statehood Act would allot 90% of gross royalties to the state and 10% to the federal government.

The federal government would collect revenues from bonus bids from federal leases, and rents on undeveloped leases. These are not estimated separately by CRS. Independent estimates by the Congressional Budget Office for President Bush’s FY2009 budget proposal show estimated bonus bid revenues of $6 billion between FY2011 and FY2018. Finally, income tax revenues from the secondary feedback effects would also increase as a result of the stimulus to general economic activity. However, these revenues are not included here due to the difficulty in estimation over the projection time horizon.

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Topics: Energy, Government, Natural Resources

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