The Fraser Institute: Global Petroleum Industry Views Arkansas as Best Place in the World for Investment; Colorado Drops to 81st

Business Wire, June 24, 2009

CALGARY, Alberta -- Arkansas is the new top dog for oil and gas investment, according to an international survey of petroleum executives and managers released today by independent research organization the Fraser Institute.

Arkansas, which was ranked third out of 81 jurisdictions in 2008, leapfrogged Alabama into the number one spot out of 143 jurisdictions ranked in the 2009 edition of the Fraser Institute’s Global Petroleum Survey 2009. The survey is available as a free PDF from the Fraser Institute web site at www.fraseramerica.org.

Along with Arkansas, U.S. states claimed nine of the top 10 spots in this year’s survey as follows: Alabama, Kansas, Mississippi, Nebraska, South Dakota, Texas, Oklahoma, and Indiana.

Austria, in fourth spot, is the only non-American jurisdiction to crack the top 10.

The Global Petroleum Survey 2009 is administered each year to petroleum executives to help measure and rank the barriers to investment of 143 oil and gas producing regions.

“The dominance of U.S. states as favorable jurisdictions for oil and gas development once again shows how the industry values stability and a clear and transparent regulatory environment,” said Gerry Angevine, Fraser Institute senior economist and coordinator of the annual petroleum survey.

But some states where the oil and gas industry has played a significant economic role are being viewed with increasing skepticism by the industry these days.

Colorado’s ranking has plummeted to 81st out of 143 jurisdictions and worst among all U.S. states included in the survey. In 2008 Colorado ranked 61st out 81 and in 2007, it was number one in the rankings.

“In recent years, Colorado legislators have introduced a swath of new environmental regulations for the petroleum industry. Now, the industry views Colorado as the worst state for investment and companies are looking to other areas,” Angevine said.

California and Alaska, which ranked 79th and 78th overall (second and third worst among U.S. states), have both joined Colorado in introducing extensive new environmental regulations. Alaska also raised oil production taxes last year.

“Investors prefer to avoid jurisdictions with high royalty rates and costly and time-consuming regulations. Other factors being equal, competitive tax and regulatory regimes can attract investment and generate substantial economic benefits,” Angevine said.

“Policy makers should recognize that overly strident regulations and anti-energy sentiment can be costly in terms of lost revenue and jobs.”

Globally, the Australian state of South Australia, the Netherlands-North Sea, and Namibia all ranked in the top 20, along with Austria and 16 U.S. jurisdictions.

Jurisdictions receiving the highest number of negative comments and generally viewed as the worst nations for oil and gas investment are: Bolivia, Niger, Venezuela, Ecuador, Sudan, Russia, Bangladesh, Nigeria, Kazakhstan, and Ethiopia.

A total of 577 respondents completed the survey questionnaire this year, providing sufficient data to evaluate 143 jurisdictions. This is a substantial increase from the 2008 survey, in which 81 jurisdictions were rated, and the inaugural 2007 survey, in which 54 jurisdictions were rated.

The survey questionnaire sought the opinions of senior executives and managers on a range of issues, including royalties and licensing agreements, taxation, the cost of regulatory compliance, trade and labor regulations, and political stability among others.

The Fraser Institute is an independent research and educational organization with locations across North America and partnerships in more than 70 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit www.fraseramerica.org