Doctoral Dissertation Defense- Dody Dharma Hutabarat
July 11, 2018
8:30 AM - 10:30 AM
The Department of Public Administration is pleased to announce the upcoming doctoral dissertation defense:
Candidate: Dody Dharma Hutabarat, PhD in Public Administration
Title: “The Effects of Oil and Gas Booms on State Revenues, Tax Burden, and Revenue Cyclicality"
Date/Time: Wednesday July 11, 2018 8:30 am
Location: UIC Art and Exhibition Hall (AEH)
400 South Peoria St., Chicago, IL 60607, Room 2203
Dissertation Committee:
Dr. David Merriman, Chair (Department of Public Administration)
Dr. Michael Pagano (Department of Public Administration)
Dr. Rebecca Hendrick (Department of Public Administration)
Dr. Yonghong Wu (Department of Business Administration)
Dr. Thomas Hayes (Gas Technology Institute)
*All are welcome to this public defense.*
See below for the Dissertation Abstract.
ABSTRACT
This research investigates the effects of recent oil and gas booms on state revenues, tax burden, and cyclicality of state revenues. The diffusion of technological innovations in horizontal drilling and hydraulic fracturing, colloquially known as fracking, across states has enabled huge amounts of oil and natural gas to be extracted profitably from underground. The examination is pursued by way of a panel data of 50 states during the period of 2000-2015 using aggregate data by drilling type.
The analysis illustrates that fracking has transformed traditionally non-oil and gas states into producing states that gain from oil and gas abundance. Furthermore, the states are able to translate the resource abundance into increased oil and gas tax revenues primarily due to high oil and gas prices as well as state tax policies. This research presents four distinct findings.
First, there is suggestive evidence that state oil and gas revenues are complementary to existing state revenues. This finding implies that the development of the oil and gas industry in the states creates indirect positive effects on other economic activities in the regions. The size of fiscal effect, however, is not as much as previously thought.
Second, estimates from statistical analysis indicate that oil and gas development results in an increase in resident’s tax burden. Although the increase is small, it is attributed to a higher demand for public goods due to lower perceived tax-prices of government expenditure. Such a perception is caused by the fact that a fraction of the total cost of state budgets is financed by oil and gas tax revenues.
Third, consistent with the political climate on a booming industry, this study finds that the oil and gas industry would see an increase in its state tax liabilities once it experiences a boom. The regression results indicate that the growth rate of state tax revenues paid by the industry would be higher than that of the industry’s profitability.
And finally, the revenue cyclicality of the energy states, regardless of whether they allow fracking or not, is not statistically different from that of non-energy states in the period of 2008-2015. This finding suggests that the resource boom does not affect the revenue cyclicality of the energy states. While the composition of state revenue plays an important role in determining the stability of state tax revenues over the business cycle, it appears that the Great Recession impacted energy states as much as non-energy states.
Date posted
Jul 2, 2018
Date updated
Jul 2, 2018