Low Oil Prices Sink State Revenue Forecast
Following a bout of weak oil prices, state revenue from the industry is expected to go down dramatically, according to a Consensus Revenue Estimating Group (CREG) report. It predicts the state will collect about $67 million less this biennium than forecast in October of last year. The overall contribution of severance taxes, investment income and royalties are still forecast to be higher than in the last biennium.
Governor Mark Gordon said it shouldn't interrupt his spending plans.
"In the coming days, you'll see our recommendations are right in line with what this CREG report suggests," he said.
Chuck Mason, chair of petroleum and natural gas economics at the University of Wyoming, said there's no reason to sound the alarm quite yet. He said international discussion is arguing to lower supply, which would improve prices per barrel of oil.
"I think the chance for an increase in price are larger than a decrease. I would be modestly surprised if prices stayed where they are for a six month period of time," he said.
Mason said it's likely the report is overly cautious in case the bottom does end up falling out of oil.
But, he added, "things are probably not as rosy as we would like, but not nearly as grim as the picture they painted."
The report predicts the sales and use tax should continue to go up. It's primarily tied to the increase in oil production plus supporting activities. The report said oil and gas rigs and job numbers have stayed the same despite increasing mineral production.