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Regional Economic Activity and Petroleum Industry Incentive Policies: Utah's Uintah Basin
Author(s) -
DUFFYDENO KEVIN T.,
ROBISON M. HENRY
Publication year - 1995
Publication title -
growth and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.657
H-Index - 55
eISSN - 1468-2257
pISSN - 0017-4815
DOI - 10.1111/j.1468-2257.1995.tb00184.x
Subject(s) - subsidy , petroleum industry , petroleum , incentive , economics , tax credit , state (computer science) , economic impact analysis , economic policy , public policy , business , public economics , economic growth , market economy , environmental science , paleontology , algorithm , environmental engineering , computer science , biology , microeconomics
Proponents of petroleum industry subsidies often assert that such policies will have positive economic implications for rural communities. This paper examines the economic impacts of such a policy in Utah. Specifically, this paper quantifies the direct and indirect economic and fiscal impacts of a tax credit granted for oil and gas well workovers in Utah's Uintah Basin. The analysis is made possible by an input‐output model constructed specifically for Utah's oil producing economy. The tax credit policy was found to generate a net fiscal loss for the state. However, it does generate employment in the Uintah Basin. The total per job cost to the state of generating an average of one job per year for 5 years through the tax credit policy is $24,056 (1991 dollars). However, if the public expenditure impacts are taken into account, then the cost per job could be as high as $48,423 (1991 dollars). Whether there are other ways to generate the same employment gains at a lower cost was lost in the political debate surrounding this petroleum industry tax credit.