The oil and gas industry is warning policymakers to tread lightly when considering new regulations, or risk billions of dollars in economic growth, thousands of jobs losses and higher energy bills.
The American Petroleum Institute issued a new study by consultants Wood-Mackenzie on Tuesday that compares pro-growth regulations to policies that would cut production.
The report comes as the industry faces a number of regulations that could pose challenges for it, from the Obama administration’s new drilling rules for the Arctic, to regulations for reducing methane emissions from hydraulic fracturing wells and strict ozone regulations.
Under the study’s “constraint” scenario, the study concludes that households can expect their energy bills to rise by $255 per year through the next two decades. But under a “pro-development” scenario, household energy costs would steadily decrease by $169 per year in the next decade to a drop of $366 a year by 2035.
Allowing oil and gas production to grow would add $122 billion per year in tax revenue to state and local coffers through 2035, while regulatory constraints on the industry would shrink revenues by $33 billion a year, according to the report.
The U.S. gross domestic product, the basic measure used to assess economic prosperity, would surge under pro-growth regulations that support development, according to the study.
Pro-growth policies would add $443 billion per year to GDP. Not surprisingly, the report shows that policy constraints would cause GDP to slump by $138 billion per year.
Job losses also would increase under regulatory constraint to oil and gas production through 2035. Job losses could rise to as many as 830,000 under the constraint scenario, while pro-growth policies would add 2.3 million jobs across the economy, according to the study.
API asked Wood-Mackenzie to model the effects of several rules, including the approval of the Keystone XL pipeline to move Canadian tars sand to U.S. refiners, and a number of Environmental Protection Agency regulations that, depending on how they are structured, could be either pro-growth or a constraint, according to the study’s executive summary.
