Energy

Regulations Are Killing 1.9 Million Jobs

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Arkansas power plant opposed by Sierra Club and Audubon Society lawsuits

So says a new study backed by the U.S. Chamber of Commerce.  The study identified 351 energy production projects across the country that are being held up by various regulatory barriers, NIMBY lawsuits, and the like. (Of course, such a study needs to be taken with a grain of salt, although my experience as a reporter who has been covering the energy sector for a couple of decades now comports with the study's general findings.) The researchers do offer this caveat:

…we do not believe that all of the subject projects will be approved or constructed even in the absence of any legal and regulatory barriers. Also, as with all economic forecasts, we recognize that there is an element of uncertainty. This could be true here because, to our knowledge, this is the first empirical study to quantify the macroeconomic and employment impact of the regulatory barriers imposed on the development and operation of so many energy projects. Consequently, we believe additional work is needed to improve the list of energy projects and to refine this study's methodology.

OK, that being said, I believe that this study's findings are more plausible than the myriad studies that purport to show that subsidized green energy projects create more jobs than they kill. So what does the Chamber-backed study find? From the executive summary:

In aggregate, planning and construction of the subject projects (the "investment phase") would generate $577 billion in direct investment, calculated in current dollars. The indirect and induced effects (what we term multiplier effects) would generate an approximate $1.1 trillion increasein U.S. Gross Domestic Product (GDP), including $352 billion in employment earnings, based on present discounted value (PDV) over an average construction period of seven years. 1 Furthermore, we estimate that as many as 1.9 million jobs would be required during each year of construction.

The operation of the subject projects (the "operations phase") would generate $99 billion in direct annual output, calculated in current dollars, including multiplier effects, this additional annual output would yield $145 billion in increased GDP, $35 billion in employment earnings, based on PDV, and an average 791,200 jobs per year of operation. Assuming twenty years of operations across all subject project types, we estimate the operations phase would yield a potential long term benefit of $2.3 trillion in GDP, including $1.0 trillion in employment earnings, based on PDV.

Therefore, the total potential economic and employment benefits of the subject projects, if constructed and operated for twenty years, would be approximately $3.4 trillion in GDP, including $1.4 trillion in employment earnings, based on PDV, and an additional one million or more jobs per year.

If you're interested in evaluating the claims yourself, go here to download the whole study.

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  1. The NIMBYs are trying to get a ban on natural gas drilling passed in western PA. Yeah, the same western PA that continues to bleed population to the rest of the country due to the collapse in manufacturing jobs that happened in the 70’s. Many of them are the same people who have bitched and moaned about the lack of working class jobs in the area for decades. Now when something finally comes along, they want to kill it off. Fucking idiots.

    1. Re: Montani Semper Liberi,

      The NIMBYs are trying to get a ban on natural gas drilling passed in western PA.

      In my experience traveling to different parts of the US, I found that places like western PA and upper Michigan are enclaves of rich liberals that want to conserve their big mansions and ranches as pristine and devoid of industrialization (no matter how benign) as possible, like the feudal lords of yore.

      Poor liberals hate the wrong rich, unfortunately: the ones that actually make things or invest in new things.

      1. Here in Texas, anyone who tried to ban landowners from capitalizing on a natural gas field would probably just . . . disappear.

        1. Which is why a) I love living in Texas and b) I am no NIMBY asshole, so I feel I’m at home.

  2. Of course, such a study needs to be taken with a grain of salt

    Thank you; nothing the Chamber of Commerce says should be taken at face value, unless it’s “Gimme gimme gimme!”

  3. Even the much vaunted “clean energy” projects are mired in regulatory red tape:

    http://dailycaller.com/2011/03…..ightmares/

    1. “Clean energy projects” ARE regulatory red tape…

  4. Jobs “created or saved” versus jobs “killed before birth or prevented”.

    Which one wins? Or is it like the irresistable force vs the immovable object?

    The mind boggles…

  5. we do not believe that all of the subject projects will be approved or constructed even in the absence of any legal and regulatory barriers

    Uh, what? The companies obviously think the project is a good idea, and without any legal or regulatory barriers, who else would have to approve a project?

  6. I’ve not read the study, but I will. I definitely think that regulations need reform. But I wonder how many of these projects are a Massey Coal Mine or a Deepwater Horizon in the making?

    Although these mistakes are more rare than those that work fine, the question is whether it’s more costly to hold up projects through regulations or endure the financial losses that occur when there are accidents?

    1. Deepwater Horizon was a result of regulation. There are perfectly drillable (like your mom) oil fields closer to the coast, which would be much safer to extract. In fact, it might be the same oil field. But the nice assholes along the coast don’t want to see the platforms, so they force operations in to much more expensive and dangerous deep sea locations.

      1. There are three thousand shallow water wells operating in the Gulf. We have lots of coastal drilling.

  7. While I’m glad to see attention given to spending and deficits, it may be just as important to roll back the Regulatory State.

    This economy will never thrive as long as it has to drag a ball and chain around.

  8. We’re against business regulations. News at 11.

  9. If the study is sincere in that it excluded the higher risk projects that I mentioned before, then it’s a plausible case that regulation reform is necessary.

    Of course, this discussion can’t be had until you have meaningful talks about business regulations, instead of what the EPA can and can’t do with carbon emissions and how threatening Muslims are to the country.

  10. Of course, this discussion can’t be had until you have meaningful talks about business regulations, instead of what the EPA can and can’t do with carbon emissions

    How is debating the EPA trying to jam down a carbon emission control scheme not talking about a business regulation?

  11. Almost every example cited in the paper has encountered difficulties due to opposition from private citizens.

    I don’t see a way around that unless we decide to end the right of voluntary association and the right to seek redress in the courts.

    1. Unless courts throw out cases when it’s not your fucking land.

      1. You assume the developer owns the land, which they often don’t. You also fail to consider that there is enormous legal precedent for denying land use where negative externalities can affect others.

        Blaming inefficient regulation oversimplifies the problems inherent in economic development. The major barrier in this particular survey is Americans suing each other.

  12. I dare say that 1.9 million jobs exist in battling those projects that would not exist if those projects went forward. Furthermore, since those stupid businesses will continue proposing stupid dangerous projects, these 1.9 million bureaucrat obstructionists will be *permanent* jobs, not temporary construction jobs which fade away once the projects are complete.

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  14. Interesting post. It’s refreshing to hear this side of the story, that regulation and bureaucracy, although somewhat beneficial, are holding back jobs that could potentially help our economy in big ways.

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