Wading into the Wake of a Drilling Downturn
WASHINGTON—Oil and gas development in the United States dramatically increased between 2009 and 2014, but was followed by a sharp downturn that affected local governments in dozens of regions. Between 2013 and 2015, researchers from Resources for the Future (RFF) conducted interviews with hundreds of local officials in 21 regions across 16 states. Today, RFF is posting a new report from five key regions that were revisited after the boom gave way.
The new report is called Local Fiscal Effects of a Drilling Downturn. Authors RFF President Richard Newell and Senior Research Associate Daniel Raimi analyzed local fiscal data and conducted dozens more interviews with local officials, finding that most local governments have continued to experience net fiscal benefits from oil and gas development despite the downturn.
The regions revisited in 2016 and 2017 were the Bakken (North Dakota), Denver-Julesburg (Colorado), Eagle Ford (Texas), Marcellus (Pennsylvania), and Permian (Texas).
The main findings were that fiscal conditions had generally improved, with 82 percent of local governments reporting net positive fiscal effects, compared with 63 percent during interviews conducted from 2013 to 2015. This improvement has been driven by reduced demand for services, along with continued strength in government revenues.
However, managing revenue volatility in oil-producing regions has emerged as a major challenge for many local governments. And while economic diversification is a priority for most local officials, the authors note that “achieving this goal will be difficult, particularly for rural communities that are or have become heavily dependent on the oil and gas sector.”
Read the full report: Local Fiscal Effects of a Drilling Downturn.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
Unless otherwise stated, the views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.
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