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RWP 16-12, November 2016; Revised January 2019

We study how subsurface ownership shapes the income effects of oil and gas extraction. For the average U.S. county with growth in extraction from 2000 to 2014, we find that royalty income and its multiplier effect accounted for 70 percent of the total income gain, with each royalty dollar generating an additional 49 cents of local income. A county where residents own the subsurface captured 28 cents more of each dollar in production than one with absentee ownership. Nationally, oil and gas production increased U.S. personal income in 2014 by $67 billion (0.5 percent) more than if all royalties accrued abroad. Areas with the same resource abundance can therefore experience contrasting economic outcomes because of differences in ownership.

JEL Classification: D23, Q32, Q33, R11

Article Citations

  • Brown, Jason P., Timothy Fitzgerald, and Jeremy G. Weber. 2019. “Does Resource Ownership Matter? Oil and Gas Royalties and the Income Effect of Extraction”. Federal Reserve Bank of Kansas City, Research Working Paper 16-12, November. Available at External Link

  • An earlier version of this paper was titled “Asset Ownership, Windfalls, and Income: Evidence from Oil and Gas Royalties” and can be found External Linkhere.


Jason P. Brown

Vice President and Economist

Jason Brown is a Vice President and Economist in the Economic Research Department of the Federal Reserve Bank of Kansas City. In this role, he coordinates the regional and commod…