Crashing Prices Hit Oil-Dependent U.S. States
Although conversations about petro-states tend to focus mostly on oil-dependent countries like Saudi Arabia, Venezuela, and Nigeria, an analysis released earlier this month by Moody’s Investment Services lays out the predicament of U.S. states whose economies have been shattered by low oil prices.
“The United States has its own petro-states and petro-towns, places whose fortunes can wax and wane with the health of the oil market,” the Washington Post reports. “Low oil and gas prices have directly lowered tax revenues in many states, and have also led to a drop in drilling activity and related services that has indirectly hurt state and local finances.”
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The Post cites Alaska, Louisiana, North Dakota, Oklahoma, and Wyoming as jurisdictions where state and local budgets are eroding due to an over-dependence on a declining resource. “These states are experiencing large budget gaps, and governing constraints create challenges for developing sustainable solutions,” Moody’s said, referring to Louisiana, North Dakota, and Oklahoma, all of which have negative credit ratings.
On the other hand, Texas and California—the country’s largest and third-largest oil producers, both of which crashed along with a declining fossil market in the 1980s—are in much better shape. “Strong growth in other parts of the economy, including professional services, information technology and financial services, is helping to propel growth, albeit at a more subdued pace,” Moody’s said of Texas.