The price of a barrel of oil has declined and that is bad news for the state budget. The price has dipped below $40 a barrel – the lowest cycle since 2008 or 2009.
Oklahoma gets a lot of money from the production tax. Both oil and gas companies are scaling back because of lower prices with layoffs, less exploration and slowed production.
And it could get worse.
President Obama’s nuclear deal with Iran paves the way for Iran to freely sell its oil on world markets. That could mean a flood of product and that would drive down the price and damage America’s oil (and gas) industry.
This is happening at a time when cars are more efficient and Americans are trying to drive less.
But the good news for Oklahoma consumers is lower gasoline prices.
The price of a gallon of gas has dipped below $2 a gallon – the cheapest it has been since Obama has been in office.
That means cheaper operating costs for cars, cheaper airline flights and even lower home energy bills. With those savings, Oklahomans can spend more money on retail goods and the economy will get a boost from that.
For at least 60 years, economists have preached that Oklahoma needs a diversified economy. Yet all of the efforts for economic growth – mostly by elected officials and chamber bureaucrats – have not generated significant growth in companies that provide jobs with good wages.
The GOP state platform points the way to prosperity but the Republican leaders in the Legislature are too involved in self-interest to help the state really prosper.
If Oklahoma continues to rely on oil and gas, it will always be a rollercoaster ride.