William Morgan

Effects of Environmental and Land Use Regulation in the Oil and Gas Industry Using the Wyoming Checkerboard as an Experimental Design

This paper estimates the extra costs of drilling for oil and gas on federal land as compared to private land in the Wyoming Checkerboard. The Checkerboard, an important site of recent oil and gas activity, is a 40-mile-wide strip of land, 20 miles on each side of the Union Pacific Railroad right-of-way, extending westward approximately 200 miles from Rawlins in south central Wyoming to the Utah state line. The Pacific Railway Acts of 1862 and 1864 conveyed to the railroad both surface and mineral rights to the odd-numbered (square-mile) sections of land in this area, while retaining the even-numbered sections as federal property.1 Thus, four private (railroad) sections surrounded each federal section and four federal

The incidence of regional taxes in a general equilibrium framework

Abstract A six-region, general equilibrium model of the United States is presented and used to evaluate the incidence of state-local business taxes. Because this formulation allows for labor and capital mobility, the provision of public goods, distinctions between household and business-level taxes, and the interaction of state-local and federal tax systems, numerical analysis is particularly appropriate. Simulations show that capital improvements generally bear the average economy-wide burden of business taxes levied on them, regardless of whether a multilateral or unilateral policy change is considered or whether the alternative tax is imposed on immobile resources or household income. However, for other factors of production, both mobile andimmobile, the effects vary across scenarios, a demonstration that incidence should not be thought of as a single outcome or value.

State Fiscal Structure and Economic Development Policy

This essay adds a new dimension to the debate concerning taxes and business location decisions by raising a simple, but perhaps underappreciated point concerning political implications of state and local fiscal structure for state economic development policy. Low taxes may well be attractive to business owners and their employees; however, a fiscal structure that is not incentive-compatible with economic expansion may end up frustrating public policies of all types aimed at promoting growth. Economic growth may be seen as increasing types aimed at promoting growth. Economic growth may be seen as increasing demands for public services, thereby placing upward pressure on tax rates faced by the original taxpayers. In Wyoming, this problem is compounded because the tax base is narrow and highly income inelastic and the incidence of taxes levied falls significantly on out-of-state residents who do not benefit from public services provided. Additionally, prospects for reducing the mismatch between taxpayers and public service beneficiaries appear to be limited because, quite understandably, state residents do not wish to pay more for public services for which they have historically paid cents on the dollar.

Shifting, Incidence, and Inter-State Exportation of Production Taxes on Energy Resources

This paper analyzes the shifting, incidence, and interstate exportation of state- and local-government production taxes on four primary energy resources in the United States: coal, uranium, oil, and natural gas. Results of the analysis are then compared with those obtained from a standard partial-equilibrium incidence model. Although a limited literature in this area does exist, the discussion focuses more directly on the ways general-incidence models must be modified to be appropriately applied to these natural resources, from both a short-run and a long-run perspective. 24 references.

Changing Energy Prices and Economic Rents: The Case of Western Coal

This paper examines various types of economic rents that are generated by changing energy prices and, in the case of Wyoming coal, analyzes how these rents have changed over time. In particular, quasi-rents did accrue to firms producing coal and coal miners, but were dissipated. Monopoly revenues appear to have been received by railroads and state governments. Price discrimination by railroads against coal consumers represents a source of present and future monopoly revenues, while a state severance tax rate that is not linked to likely declines over time in social-impact costs represents another. The analysis highlights some questions that ought to be raised in public policy debates over energy policy. 11 references, 2 figures.

Environmental and Land Use Regulation in Nonrenewable Resource Industries: Implications from the Wyoming Checkerboard

This paper examines how the oil and gas industry responds to changes in environmental and land use regulations pertaining to drilling by examining differences in regulatory practices on federal and private land. A simulation model for Wyoming is used to estimate losses of oil and gas output over the next 60 years because of higher drilling costs found on federal property. The present value of these losses comes to about

Interstate Tax Exportation within the United States: An Appraisal of the Literature

800 million. Also, this case study is of interest because it shows that future production is more sensitive to changes in environmental regulations that apply to drilling than to changes in severance taxes levied on production. (JEL Q24, Q32)

Environmental and Land Use Regulation in Nonrenewable Resource Industries

This paper evaluates the literature concerning interregional, exportation and importation of state and local taxes. General analytical, principles of tax exportation are described. Major empirical studies, which, show considerable variation of exportation by type of tax and by state, are, reviewed critically. Extensions of previous empirical findings are discussed, in order to consider the long-run effects of state tax policy on regional, growth and resource allocation. The assessment of long-run impacts is shown, to be an important area for future research.

The effects of state guarantees of municipal bonds

The purpose of this note is to call attention to and to take responsibility for errors in our previously published article in Land Economics (Kunce, Gerking, and Morgan 2004). The problems affect Section 2 of our Land Economics article, which provides background discussion. In that section, based on results presented in Kunce, Gerking, and Morgan (2002), we state that oil and gas drilling costs are significantly higher on federal property than on private property. We now realize that this finding cannot be substantiated by our previous work. This weakens the motivation for our paper. There are two problems with our finding of drilling cost differences on federal vs. private property. First, the drilling cost data we used are predicted values from a regression model. The model does not distinguish ownership of different parcels of land, so predicted drilling cost values for similar wells will be the same on both federal and private property. Second, in the process of handling the data received from IHS, some were systematically altered by increasing drilling cost figures for 33 out of 615 wells on federal property and reducing drilling cost figures for 77 out of 789 wells on private property. In any case, systematic changes in the data are largely responsible for our finding that drilling costs on federal property are significantly greater than drilling costs on private property. Further research must show what can and cannot be said on whether environmental and land use regulations lead to drilling cost differences on federal vs. private property. Nonetheless, taking the initial estimates of drilling costs on the two types of land as given, the simulation results reported in the remainder of our Land Economics paper are error-free to the best of our knowledge. It is the reasoning presented for undertaking the paper that is flawed.

Tax Exporting, Regional Economic Growth, and Welfare

This paper analyzes the allocational and distributional effects of state municipal bond guarantee programs and evaluates public guarantees given that private programs also exist. The state programs as constituted will lead to misallocation of resources and questionable cross subsudies among municipalities. The only economic rationale for state subsidies is that the local public infrastructure generates positive externalities which are beneficial to the rest of the state. Even if the allocative and distributional deficiencies of the state programs were corrected, it is questionable whether state programs are desirable given that private programs also exist.