American Oil and Gas Reporter - June 2014 - 171

cording to Watts, the oil and gas industry
today retains those values of sacrifice,
commitment and a willingness to take
risks.
State Politics
In his breakfast session presentation,
state Senator Craig Estes, R-Wichita Falls,
hailed the oil and gas industry's contributions to the Texas job market.
Estes, the vice chairman of the Senate
Natural Resources Committee, reported
the state's oil and gas sector supported
370,000 workers and paid them an average
annual salary of $120,000. He compared
that with other private sector jobs, which
average $47,000 a year. Each oil and gas
employee pays $32,500 annually in taxes,
while their counterparts contribute $5,000
a year to state and federal coffers, he
said. "So to say that your industry is
doing more than its fair share is absolutely
the truth," Estes praised.
"Texas has been getting a lot of accolades about creating more jobs than anyone, being the best place to work, the
best place to have a business," Estes said.
"Over the past 10 years, thousands of
people have moved to Texas. They have
many stories, but most of it comes down

to better economic opportunities."
Alliance members should demand that
their representatives support federal energy
policies that are leading the United States
to energy independence, he urged. Not
long ago, experts were adamant that such
a goal was impossible, but he said that it
now was possible, if Washington supported
oil and gas activities.
Achieving energy independence should
be a bipartisan effort, Estes held, saying
legislators from both parties had to understand that the United States needed to
control its own destiny.
"Why we are not working on that furiously in Congress, I have no idea. But
political games are played between the
right and left up there," Estes assessed.
"The successes we have experienced,
while they have brought problems, are
no accident," he offered. "They are a
direct result of keeping taxes low and
keeping regulations minimal. When governments do not spend too much, when
they do not tax too much and when they
do not regulate too much, the state economy grows, businesses expand and jobs
are created, and hard-working people
prosper. It seems like a pretty simple
equation to me."
❒

State Senator Craig Estes, R-Wichita
Falls, praises the oil and gas industry's
contributions to the economic health of
Texas. Speaking at the annual convention of the Texas Alliance of Energy
Producers, held in Wichita Fall, Tx.,
Estes, vice chairman of the Senate Natural Resources Committee, said thousands had moved to Texas over the past
decade, with many pursuing the aboveaverage salaries paid by oil and gas
companies.

Study Attacks Climate Change Models
WASHINGTON-The Heritage Foundation is attacking the computer models
the U.S. Environmental Protection Agency
uses to write regulations governing carbon
dioxide emissions. The foundation's Center
for Data Analysis asserts EPA's models
are unsuited for real-world policy applications.
According to Unfounded FUND: Yet
Another EPA Model Not Ready for the
Big Game, written by researchers Kevin
Dayaratna and David Kreutzer, EPA uses
neither the most recent, peer-reviewed
estimates of CO2's impacts on temperatures nor a standard discount rate in its
cost/benefit analysis, as required by the
federal Office of Management and Budget.
EPA's own models demonstrate it is
unclear whether CO2 emissions should
be restricted or encouraged, the Heritage
Foundation contends, yet it says the
agency has selected assumptions that fix
the social cost of carbon (SCC) at $40 a
ton. SCC is defined as the economic
damage that one ton of CO2 emitted
today will cause over the next 300 years.
Among the findings of the Heritage
Foundation's report:
* Using an OMB-mandated discount
rate of 7 percent, the Climate Framework

for Uncertainty, Negotiation and Distribution (FUND) model suggests an average
SCC of essentially zero dollars, suggesting
no net economic damages from global
warming.
* Using the OMB-mandated discount
rate in conjunction with updating the
equilibrium climate sensitivity distribution,
the model reduces its SCC estimate for
2020 by nearly $34 a ton, a drop of more
than 102 percent.
* The FUND model allows negative
SCC estimates. In some instances, the
chance of the SCC being negative is
nearly 70 percent.
"With such great sensitivity to assumptions producing widely varying results, the FUND model may remain an
interesting academic exercise, but it is
almost certainly not reliable enough to
justify trillions of dollars' worth of additional economic regulations imposed on
the U.S. economy," the Heritage Foundation declares.
It says EPA uses three statistical programs, known as integrated assessment
models, to estimate SCC values. In 2013,
the Heritage Foundation says it analyzed
one of them-the DICE model-and found
it to be flawed beyond use for policymaking. As with that earlier study, the

foundation says the FUND model is extremely sensitive to assumptions, and at
times even suggests net economic benefits
to CO2 emissions. Consequently, the Center for Data Analysis concludes, both
models are unsound as a basis for justifying
significant regulations on the U.S. economy.
Alternate Methods
Unable to enact cap-and-trade legislation in Congress, the Heritage Foundation
says President Barack Obama has turned
to regulation by federal agencies, especially
the EPA, to advance his agenda. SCC is
one tool the agency uses to justify its increasing number of regulations. Assigning
a dollar cost to every ton of CO2 emitted
can tilt the cost/benefit calculus dramatically toward more expensive regulation,
Unfounded FUND asserts.
The Heritage Foundation calls regulatory use of the SCC disturbing because
the method for determining its value-despite the seemingly sophisticated process
for estimating it-is almost completely
arbitrary.
Other researchers have pointed to fundamental and fatal flaws in the damage
functions of the computer models used
to estimate the SCC, Unfounded FUND
JUNE 2014 171

American Oil and Gas Reporter - June 2014

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