This week, the Congressional Budget Office (CBO) – a “strictly nonpartisan” agency that “conducts objective, impartial analysis” – issued a new report, “The Economic and Budgetary Effects of Producing Oil and Natural Gas From Shale,” detailing the clear national benefits tied to responsible shale development.
According to CBO, American shale gas – which now represents “40 percent of U.S. [natural gas] production” – will continue to increase our nation’s gross domestic product (GDP), fuel federal tax revenue growth, stabilize energy prices for consumers and provide huge amounts of royalty payments.
Here are key takeaways from CBO’s 48-page report:
- CBO estimates that if shale gas did not exist, the price of natural gas would be about 70 percent higher than currently projected by 2040.
- The technological innovations behind hydraulic fracturing and horizontal drilling make existing labor and capital…more productive than they otherwise would be. That heightened productivity has increased GDP and will continue to do so.
- Shale development causes labor and capital to be used that would otherwise be idle, again raising GDP.
- The increase in GDP resulting from shale development has increased federal tax revenues, and it will continue to do so.
- CBO estimates that federal tax revenues will be about three-quarters of 1 percent (or about $35 billion) higher in 2020 and about 1 percent higher in 2040 than they would have been without shale development.
- This report considers options that would change export policies … and concludes that the options would probably increase domestic production but have little effect on prices. … That increase in production would probably make GDP and federal revenues slightly higher than they would be under current export policies.
For more reports on responsible shale development, please visit the MSC’s online Library.