The fiscal impacts of increased U.S. oil and gas development on local governments

Abstract

© 2018 Elsevier Ltd Increased US oil and gas production has created opportunities and challenges for local governments. Through interviews with roughly 250 local officials, we evaluate the fiscal effects of this development in 21 regions across every major US oil and gas producing state during “boom” and “bust” periods. Growing oil and gas production has increased local government revenues through a variety of mechanisms, including property taxes, sales taxes, severance taxes, and more. Industry activity has also increased costs and demand for local services led by road damage, water and wastewater infrastructure, and a range of staff costs including emergency services and law enforcement. Despite volatility in revenues and service demands, our interview results show that 74% of local governments have experienced net fiscal benefits, 14% reported roughly neutral effects, and 12% reported net fiscal costs. Local governments in highly rural regions experiencing large-scale growth have faced the greatest challenges. To further improve future outcomes, local officials can plan for impacts, state policymakers can re-examine revenue policies, and operators can pursue collaboration with local governments.