REGIONAL ECONOMIC-ACTIVITY AND PETROLEUM-INDUSTRY INCENTIVE POLICIES - UTAH UINTAH BASIN

Proponents of petroleum industry subsidies often assert that such poli cies will have positive economic implications for rural communities. T his paper examines the economic impacts of such a policy in Utah. Spec ifically, this paper quantifies the direct and indirect economic and f iscal impacts of a tax credit granted for oil and gas well workovers i n Utah's Uintah Basin. The analysis is made possible by an input-outpu t model constructed specifically for Utah's oil producing economy. The tax credit policy was found to generate a net fiscal loss for the sta te. However, it does generate employment in the Uintah Basin. The tota l per job cost to the state of generating an average of one job per ye ar for 5 years through the tax credit policy is $24,056 (1991 dollars) . However, if the public expenditure impacts are taken into account, t hen the cost per job could be as high as S48,423 (1991 dollars). Wheth er there are other ways to generate the same employment gains at a low er cost was lost in the political debate surrounding this petroleum in dustry tax credit.