The Petroleum Alliance of Oklahoma is urging lawmakers to heed Governor Stitt’s warning of the effect the current industry downturn could have on the state budget.
In his State of the State remarks Monday, Governor Stitt recognized the central role the hardworking men and women in the oil and natural gas industry play in Oklahoma’s economy.
“We all know that Oklahoma’s economy, and quite frankly our state budget, is built on the backs of the hardworking men and women in the oil and natural gas industry,” said the Governor. “When I delivered this address last year, 60 percent more drilling rigs were operating in Oklahoma than exists today.”
He went on to state that the first budget was “blessed by a thriving industry, but now, the state must look at the realities of a changing and evolving market that is becoming more efficient and less influenced by international volatility.
“As a result, our State’s general revenue fund is estimated to be down almost one percent versus fiscal year 2020, and our total spending authority is very close to the same amount. But we have nothing to fear. We will remain vigilant in recognizing our needs, planning for our future, and shedding waste where operations are outdated or redundant.”
According to a study conducted by the Oklahoma Energy Resources Board (OERB), the industry accounted for $65.4 in Oklahoma’s gross domestic product, $36.8 billion in household earnings, and 357,000 jobs in 2018. In addition, the state’s oil and natural gas sector has contributed $6.6 billion in gross production tax revenue ($663 million annually) to the funding of Oklahoma state government in the past decade, with $2.1 billion being apportioned strictly for common and higher education.
“While our industry remains by far the largest contributor to the state budget, there is reason for concern,” said Alliance Chairman David Le Norman. “As the Governor pointed out, we’ve seen a dramatic decline in the state’s rig count over the past year. This drop, combined with historically low commodity prices, puts the industry in a precarious position. Now is not the time to push for increased tax burdens, unnecessary regulations, or policies that unfairly advantage one energy source over another,” said Le Norman.
“On behalf of our members, who include individuals and companies of all sizes from every segment of the industry, we simply ask that the Legislature refrain from any action that would compound the already difficult environment in which Oklahoma’s oil and natural gas producers are currently operating,” Le Norman concluded.
Source: Petroleum Alliance of Oklahoma