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Economic Research: Oil, Gas and Coal Bennies Limited for MT

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By Deb Courson Smith

Oil, gas and coal are often touted as big drivers for Montana’s economy, but a new report from Bozeman-based Headwaters Economics shows the in-state benefits are limited. In fact, it says, less than three percent of both total employment and personal income is connected to those energy projects.

Report author Julia Haggerty says she also discovered that jobs are closely connected to market prices rather than state policies such as industry taxes.

“It’s really those commodity prices, which are highly volatile, that determine why people gain employment quickly when prices go up and lose employment and income quickly when prices go down.”

State severance taxes are the best way to maximize state economic benefits when valuable fuel resources are mined, Haggerty says, because the revenue can grow even after the jobs are gone. Returning some of that revenue to energy-producing areas is also important, she says, since those towns and counties bear a large share of the cost of energy infrastructure. Wyoming, Colorado, New Mexico and Utah also were analyzed for the report. Wyoming was singled out as the state with the best energy tax policies for long-term economic health.

The cost to the environment and quality of life are additional economic factors that Haggerty says need more consideration.

“The cumulative impacts that are surfacing in these areas with regards to air quality, for example, as well as long-term impacts to residents who are dealing with the daily industrialization of their landscape.”

The full report, “Fossil Fuel Extraction and Western Economies,” is online at ht.ly/4DC2g.

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