New Research: Oil and Gas Revenue Allocation to Local Governments in Eight [US] States

A new working paper/report is available from NBER, Richard G. Newell [duke.edu] and Daniel Raimi [duke.edu] both Duke University.

Oil and Gas Revenue Allocation to Local Governments in Eight States.

Abstract:

This report examines how oil and gas production generates revenue for local governments in eight states through four key mechanisms: (i) state taxes or fees on oil and gas production; (ii) local property taxes on oil and gas property; (iii) leasing of state-owned land; and (iv) leasing of federally-owned land. To compare across states, we show the percentage of total revenue generated by oil and gas production that flows to local governments from these revenue sources. We also connect these calculations to related research to assess whether state and local policies are providing sufficient revenue for local governments to manage increased costs associated with shale development. We find that in most cases, existing policies appear to provide adequate revenue for local governments to manage increased costs associated with growing oil and gas activity. As of 2014, revenues fall short of the costs imposed on local governments in some highly rural regions experiencing rapid, large-scale development, notably the Bakken region of North Dakota and Montana, select counties in Texas, and select local governments in Colorado and Wyoming. Collaboration between industry and local governments, especially on road repairs, could reduce public costs.

Available here [nber.org]. 

FT: Algerian protests against fracking

The FT reports [FT.com] on protests that have erupted in the south of Algeria against fracking plans of the government. Residents fear that the chemicals used for the procedure will pollute the scarce water resources available in the region that borders the Sahara desert.

The government states that it should develop all resources for the economic benefit of the country. However,

"Ms Touni, the protest leader, said perceived corruption and anger about how the government distributes resources from Algeria’s vast energy resources had contributed to doubts about the project."

Everybody loves SWF

FT's Gillian Tett comments [FT.com] on the sudden popularity of Sovereign Wealth Fund constructs, including among western countries. She notes in particular that the UK Treasurer Osborne announced to set up one in his autumn statement [FT.com]:

we’re announcing a new Sovereign Wealth Fund for the North of England so that the shale gas resources of the North are used to invest in the future of the North.

The revenues of shale gas are for now still largely illusionary. The question why the UK didn't set up a SWF for for their real revenues from the North sea was discussed in the Guardian [oxcarre.blogspot.com] not too long ago. On the OxCARRE [oxcarre.ox.ac.uk] website you'll find further research on Sovereign Wealth Funds and optimal savings of commodity export revenues.