Wharton Prof Releases Oil & Gas Report

Last week Joseph R. Mason of LSU and Penn's Wharton School released a report called "Budget Impasse Hinges on Confusion among Deficit Reduction, Tax Increase, and Tax Reform: An Economic Analysis of Dual Capacity and Section 199 Proposals for the U.S. Oil and Gas Industry." It is available online as a 19 page pdf. The research was supported by the American Energy Alliance, which is supported by contributions from individuals, foundations and corporations (read into that what you will). Mason also includes the disclaimer that his results are his own and not those of AEA, LSU or Wharton.

Last week I sat in on a press call with Mason and Tom Pyle of the AEA. If you missed the call, Mason has a video up on You Tube that goes over in more detail many of the points he covered in the call. As I understand it, which is not much as I have never taken an econ course or read an econ-related book, Mason doesn't think raising taxes would help the economy because when you raise taxes you get a higher level of "tax avoidance." (I think this means cheating.) He thinks we should do more drilling on the outer continental shelf, as that would create jobs and bring in revenue. (I think there's a reason why we aren't doing that right now.)

Mason also thinks we should not mix energy policy and deficit reduction. He said if we want to change energy policy we should do that separately. The in-depth discussion on the specifics of tax and regulation are way over my head. Readers are encouraged to review it themselves.

Mason did say he thought deficit reduction should come from institutional reform, as suggested by scholar and Nobel Prize winning economist Douglass North. I found a power point presentation by North. The last slide addresses institutional reform and his points were to make the market fairly accessible to everyone, invest in education, and engage opponents through the political process.

During the call I asked why companies that can afford to pay such high executive compensation should get tax breaks. (Full disclosure: The investment club I belong to owns stock on Occidental Petroleum). Mason replied by saying that CEOs has short careers and are compensated highly for a short time. (Make of that what you will.)