Long-Term Economic Planning Needed in Oil- and Gas-Producing States

PAD-81-09: Published: Dec 10, 1980. Publicly Released: Dec 10, 1980.

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The fiscal and economic condition of the Southwestern States (Texas, Oklahoma, and Louisiana) has long been inextricably linked to oil and gas activities. However, the region's oil and gas reserves and production have been declining since the early 1970's, and prospects for this trend to reverse are not good. Yet continued heavy reliance on decreasing resources has caused little concern for diversification planning, perhaps largely because rising energy prices are stimulating the region's economy and generating increased public sector revenues. Although the region currently is fiscally and economically healthy, troublesome trends indicate that long-range planning is needed.

Historically, direct mineral revenues have been a large part of the Southwestern States' budgets. In 1977, at least 1 of every 13 regional employees worked in petroleum and related industries, and 12 percent of the region's total payroll dollars was paid by these industries. Generally, the region's petroleum and related industries are heavily concentrated within certain cities and counties. Areas having a heavy concentration of petroleum and related industries become vulnerable as nonrenewable oil and gas resources are depleted. The region's vulnerability can be decreased through diversification; however, the incentive to diversify is hampered by the high profits, wages, and taxes currently provided by these industries. The likely crude oil outlook for the three States is a continuation of the current trend of decreasing production. A turnaround is more possible for natural gas production than for oil, but unlikely. However, the States do not have specific economic development policies to encourage diversification which would counterbalance their dependence on the oil and gas industry. Finally, the Federal agencies which have planning assistance programs are not addressing possible long-range fiscal and economic problems in the Southwest stemming from the region's heavy reliance on the two industries.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should consider the following oversight options to assure that the Southwest's oil and gas issue is addressed (1) through the annual authorizations and appropriations processes, the Congress can monitor the Federal agencies' progress in meeting the recommendations; and (2) to facilitate oversight, as well as to promote greater efficiency and effectiveness of planning and development efforts, the Congress could require the applicable Federal agencies to follow a common regional strategy or action plan.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HUD should direct the Assistant Secretary for Community Planning and Development to direct area offices in Texas, Oklahoma, and Louisiana to consider the issue, in reviewing 701 applications and overall program designs of the ability of the 701 program to address regional concerns.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Housing and Urban Development (HUD) should direct HUD's area offices to be cognizant and supportive of the other Federal agencies' issue-oriented efforts.

    Agency Affected: Department of Housing and Urban Development

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should insure that Economic Development Administration's (EDA) efforts be coordinated with those of the Ozarks Regional Commission.

    Agency Affected: Department of Commerce

  4. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Commerce should have EDA use its programmatic elements to help assure that applicable Federal, State, and substate planning processes include a focus on the Southwest's oil and gas issue.

    Agency Affected: Department of Commerce

 

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