Oh no, not again.
Or as the old
bumper sticker read: “Please God, give me one more boom. This time I promise
not to piddle it away” or words to that effect.
Our governor
and members of the Legislature are preparing for one of the more difficult
budget sessions in memory as severance tax revenues are plummeting because of
low oil and national gas prices worldwide.
Wyoming is a
commodity state, which means that its economy booms or busts, based on the
prices that are charged for energy in the form of oil, natural gas, coal and
uranium.
Out here on
our isolated island, we sometimes think we are immune to the economic
calamities happening elsewhere in the country. Not true. National and international events are
affecting our economy in a big way.
To those of us
who count our lifetimes in Wyoming in decades, a certain question comparing our
state with the rest of USA comes to mind: Is Wyoming’s economy the opposite of
the rest of the country’s?
It may be
coincidental but it seems that the last three boom-bust cycles in Wyoming and
the USA have seen them as two ends of a teeter-totter. The Cowboy State’s
economy has been counter-cyclical to the economy of the rest of America.
In the late
1960s and early 1970s, the USA was booming. Wyoming was hurting. Then-Gov. Stan Hathaway said when he took
office in 1966 he discovered the state had just $80 in its general fund. You may
have to go back to some dustbowl states of the 1930s to find state governments
in that bad a fiscal shape.
Then Wyoming’s
economy took off in the mid-1970s and peaked in 1981. Then it tanked in the mid-1980s and early
1990s.
Meanwhile, the
USA was doing very well from 1985 to 1995, while we struggled to get back on
our feet.
Since 2002,
our statewide economy has been soaring as energy prices spiked to all-time
levels. At the same time the national
economy slipped partially under the burden of those same high energy prices.
In 2008 the
economy was the biggest single issue in that national presidential
election. Everyone was saying the USA was
in a recession. Here in Wyoming? We had
$11 billion in the bank and things are going very well.
Thus, the
theory – as the USA economy goes down, does Wyoming’s economy go up?
Now here in
2015-2016, the country’s economy is bouncing back, mainly because of super low
prices at the gasoline pump. I saw prices at $1.67 per gallon in southeast
Wyoming earlier in December.
But as the
nation’s fortunes rise, Wyoming’s economy is headed south. We levy a fair
severance tax against the oil, natural gas, coal and uranium that come out the
ground here and we use that money to pay for our state government. It is looking like this might add up to a
$600 million shortfall for the next few years.
So, why is
this happening in Wyoming? Again?
A very simplistic answer could be that
Wyoming’s keen-eyed focus on commodities as its economic drivers just is not
working. With coal, oil, natural gas and
ag products as the key components of our economy, well, when prices are high
for these items our economy soars here, too. When these commodity prices are
high across the country, perhaps it is a catalyst that causes plants to close,
jobs to be lost and politicians to start using “it’s the economy, stupid” as
their mantra for getting elected.
Obviously, things
are more complicated than this.
Today, most
observers believe the demand for commodities worldwide at some future date might
help Wyoming’s economy bounce back, no matter what happens to the rest of the
country.
Also, keep in mind those international
Paris global warming accords that condemn fossil fuels. They may play a more
permanent role in bad economic times here in Wyoming for some time to come.
A few years
ago, I quoted a former Wyoming Business Council CEO Tucker Fagan, who is one of
the true believers: “Give credit to leadership and the Legislature
for investing the mineral tax receipts in people (Hathaway Scholarship Program,
community colleges and Department of Workforce Services) and hard
infrastructure. This will give Wyoming a step up to diversify the economy. When
we did not have business parks, available water, sewer, power, broadband,
etc., we just were not in the game. Now we will be when the economy
comes out its current malaise.”
Let’s hope so.
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