CNBC Debunks Industry-Backed Study Behind Trump's Dirty Energy Plan
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Donald Trump’s promise to boost the U.S. economy by rolling back environmental protections rests on a deeply flawed study linked to the oil and coal industries, CNBC.com reported.
In his energy plan, the GOP presidential candidate cites the Institute for Energy Research (IER) to claim that “lifting the restrictions on American energy” will create “a flood of new jobs,” increase annual wages by $30 billion over seven years, and increase annual economic output by nearly $700 billion over the next 30 years.
But as CNBC’s Tom DiChristopher pointed out in a September 6 article, Trump misstated the scope of IER’s report, which “does not actually attribute the gains to a lifting of restrictions, as Trump indicated, but to opening all federal lands to oil, gas, and coal leasing.” Furthermore, economists explained to CNBC that the IER report relies on a forecasting model that “often overstates the benefits of increased drilling,” is based on the “questionable assumption” that government policies -- rather than economic conditions -- are limiting fossil fuel production, and makes “no attempt to weigh the environmental and social costs of opening federal lands against the benefits.”
DiChristopher also detailed IER’s ties to the oil billionaire Koch brothers. He explained that IER’s affiliated organization American Energy Alliance is “one of a number of groups funded by a network of donors” connected to the Kochs, whose companies “explore for and produce oil and natural gas; market coal; and operate or own 4,000 miles of oil, fuel, and chemical pipelines.”
From the September 6 CNBC.com article:
Donald Trump has promised to roll back regulations and unleash an energy revolution in America — but economists have their doubts about the plan.
The Republican presidential candidate says he will boost America's economic output, create millions of new jobs, and put coal miners back to work. But the windfalls Trump touts originate from a report commissioned by a nonprofit with ties to the energy industry and whose findings rely on a forecasting model that often overstates the benefits of increased drilling, according to economists who have researched the U.S. shale oil and gas revolution.
The IER report uses a method of forecasting called the input-output model, which is frequently used by consultants and government agencies to make projections about the effects of economic activity.
But a number of economists say that model is not well-suited to predicting how more drilling will produce windfalls in other sectors, and academics are skeptical of the method because the results, or outputs, rely so heavily on the assumptions, or inputs.
"This is not academic research and would never see the light of day in an academic journal. The pioneering research ... from years ago is rarely employed any more by economists," said Thomas Kinnaman, chair of the Economics Department at Bucknell University, who reviewed the IER report for CNBC.
Kinnaman said the technical assumptions used throughout the study are not "egregious," but he noted that the paper makes no attempt to weigh the environmental and social costs of opening federal lands against the benefits.
Peter Maniloff, assistant professor of economics at the Colorado School of Mines, said the IER study is based on a questionable assumption.
"The IER report assumes that policy restrictions are the major factor holding back coal, oil, and gas production," but it has more to do with straightforward economics, he said. "Domestic oil drilling on available land has dropped by three-quarters since 2014 due to low prices."