The most thorough study done on this question, 
dealing with Delaware and New Jersey, declares that 
after an initial shortfall, the long-run effect on States 
and communities is positive in terms of revenues as 
offset by expenses. A major exception is where one 
community or State gets the revenue, while an ad- 
joining area has the expenses; in such a case the 
long-term as well as short-term effect would be 
negative. 
In its study, Coastal Effects of Offshore Energy 
Systems, dealing with impacts that might be expected 
in coastal Delaware and New Jersey, the Office of 
Technology Assessment (OTA) concluded: * 
“OTA has prepared a fiscal analysis of 
costs and revenues from (Outer Conti- 
nental Shelf) activities in the States of 
New Jersey and Delaware assuming pro- 
jected development associated with discov- 
ery of 1.8 billion barrels of oil in the 
Baltimore Canyon Trough. The fiscal 
analysis concludes that, in general, per 
capita tax revenues from OCS-related 
activities would be considerably higher 
from the fourth year onward than state- 
wide per capita revenues from other sec- 
tors under the assumptions of the study 
... If, however, most of the support areas 
and OCS employees were located in one 
State and the landings of oil and natural 
gas were made in another, the results 
would be very different... 
“In 1972, per capita state and local rev- 
enues in New Jersey were $847. Before 
any major onshore investments occurred, 
revenues produced by OCS activities 
would be primarily from individuals which 
average $512 per capita in New Jersey. 
Assuming that per capita expenditures for 
public services are about equal to total 
per capita revenues of $847, per capita 
expenditures to support OCS-related popu- 
lation would exceed the per capita rev- 
enues from OCS activities by about $335 
during the first two years of development. 
The gap would decrease to $225 in the 
third year as some business taxes accrued. 
The picture would change in the fourth 
year when major onshore investments 
would be made for pipelines, tank farms, 
and natural gas processing plants. In the 
year when these investments would be 
made, the State would receive revenues 
from a real estate transfer tax and from 
its sales tax (or equivalent use tax). Since 
80 U.S. Congress, Office of Technology Assessment. Coastal 
Effects of Offshore Energy Systems. Washington, D.C., Govern- 
ment Printing Office, November 1976, p. 157. 
these are assumed to be concentrated in 
the fourth year, the per capita tax rev- 
enue is calculated to jump nearly $11,000 
in that year in New Jersey. The jump 
would not be so pronounced in Delaware 
where there is presently no sales tax. In 
subsequent years, the property tax would 
be the main source of revenue. Property 
tax revenues would decline on a per cap- 
ita basis for a period because they would 
be divided among an increasing direct 
population engaged in offshore construc- 
tion and development drilling. Finally, 
per capita property tax revenues would 
begin to rise in the ninth year when com- 
pletion of construction would lead to a 
decrease in OCS-related population. For 
all years after the fourth year, per capita 
revenues from OCS activities would sub- 
stantially exceed the statewide average.” 
The OTA study supports the position of those 
who advocate loans and bond guarantees to pro- 
vide needed facilities and services early, and use of 
revenues to pay them off in time. The study suggests 
that loans need only be short-term because, as off- 
shore fields are developed, revenues will very soon 
come to exceed expenditures by sizable margins. 
This is so because the support facilities needed for 
the offshore industry are heavily capitalized and 
produce high revenues with relatively few workers 
after they are installed and operating. 
A recent study on OCS issues published by the 
Council on Environmental Quality contains evi- 
dence that community support for the introduction 
of the offshore industry is fairly considerable. 
In Kenai, Alaska, for instance, an isolated rural 
community of about 1,000 has been transformed by 
production of oil and gas resources in State-con- 
trolled waters in nearby Cook Inlet. The com- 
munity went through a rapid expansion and then 
decline after initial construction of facilities was 
completed. New community services were required, 
as was additional housing. The evidence is that the 
area absorbed the four-fold increase in population 
and the disruption of its previous way of life success- 
fully. 
A survey of residents and city officials gave the 
following assessment of the change brought to 
Kenai:® 
“Many respondents mentioned a better 
standard of living, more diverse jobs, in- 
creased land values, and better roads, 
61 Council on Environmental Quality. Oil and Gas in Coastal 
Lands and Waters. Washington, D.C., Government Printing 
Office, 1977, p. 65. 
82 Ibid. 
Iv-19 
