Report: Oil and gas can boost economies and outdoor recreation

Oil and gas development can coexist with hiking and hunting — and sometimes even fosters that outdoor recreation — according to a new study on how counties are balancing the activities.

The research, conducted by professors from two Utah universities and funded by the American Petroleum Institute, relies on case studies from 16 counties in California, Pennsylvania and six other states as evidence that areas fare better economically when they take an equitable approach to energy development and natural amenities.

“Energy and amenity development are not mutually exclusive,” said Southern Utah University political science professor Ryan Yonk and Utah State University economics professor Randy Simmons. “Because both energy and amenity resources provide value to a county, when counties have both resources they tend to develop both, and in a way that allows both sectors to grow.”

The oil industry-funded report is the latest to make the case for a measured approach to conservation and energy development. Earlier this month, the Center for American Progress issued its own “Blueprint for Balance” arguing that the United States can expand oil and gas production in ways that are economically sustainable and environmentally sound — with full buy-in from the public.

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The zeal to find balance comes against the backdrop of exploding domestic oil and gas production as energy companies combine hydraulic fracturing and horizontal drilling to unlock previously unrecoverable hydrocarbons from dense rock formations. U.S. proved crude oil reserves in 2011 rose to their highest level since 1985, while natural gas reserves were up almost 10 percent from the previous year, according to the Energy Information Administration.

“This study shows that oil and natural gas development can stimulate economic growth in areas that also support outdoor recreation,” said Kyle Isakower, API’s vice president for regulatory and economic policy. “Each county is unique, but where oil and natural gas development is an option, it yields tremendous economic growth and is compatible with recreational activity.”

Although the new report looks at eight states, California stands out as a good example of how areas are tackling the issue. While California has cultivated a vitally important tourism industry founded in part on its natural resources, the state is also the nation’s third-largest petroleum producer. The Monterey Shale formation in California may hold 400 billion barrels of oil, according to IHS CERA, though the government’s Energy Information Administration believes only about 15.4 billion barrels may be technically recoverable.

The report authors acknowledge that balancing conservation and energy development is easier in areas where the resources are physically separated, as is the case in Kern County, Calif. There, oil and gas reserves are concentrated in the western part of the 8,000-square-mile county, far from Sequoia National Forest in the east. As a result, Yonk and Simmons say, the county has moved from one primarily focused on agricultural production to a place where the oil industry makes up a substantial portion of the economy, even as local leaders take significant steps to developing amenities and attracting visitors.

One outlier in the Golden State is Monterey County, Calif. Although it has “significant” oil and gas resources and some extraction has begun, “Monterey County deliberately focuses on amenity development over energy development due to county preferences.”

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Nationwide, the report authors document instances where energy development provides a critical revenue stream for schools and public institutions, or oil and gas infrastructure is useful to hikers and hunters.

For instance, the school and institutional trust lands administration in Uintah County, Utah is a mineral rights owner that uses oil and gas royalties to finance education and other public institutions. In the same county, mineral lease fee revenue was used to build a facility for displaying 30,000 dinosaur bones, and the same roads built for oil and gas development allow hunters to access coveted areas.

“In other counties, payments to land owners have allowed farmers and ranchers to keep their land and their lifestyle,” Yonk and Simmons wrote. “The economic growth resulting from extractive industries allows counties to diversify their economic portfolios that include both energy extraction and the development of amenities.”

Tilting too far toward oil and gas development — at the expense of natural resources — could be a risky economic bet too, the report suggests, since the sectors offer different types of employment.

While energy extraction operations offer higher paying jobs, Yonk and Simmons say, hospitality and recreation operations employ greater numbers of people. Ultimately, they conclude, “a county’s economic well-being depends on having both high-paying jobs and a large number of jobs.”