It appears significant economic growth won’t return to Wyoming until the higher energy prices of the last few months are sustained for an extended period.
Quarterly economic indicators released in January by the state’s Economic Analysis Division show that an uptick in oil and natural gas prices — and even drilling activity in Wyoming — has not led to major job growth or higher sales tax revenue.
The division’s lead economist, Jim Robinson, said this is primarily due to what is called “drilling but uncompleted wells” or DUCs.
That means the rig count, which has gone from single digits over the summer to almost 20 this winter, can be a deceptive measure of economic growth in the state.
“They’ve drilled, and that’s all they’re going to do with them for now,” Robinson said. “That’s why we’re not seeing the purchases of fracking sand or the hiring of crews.”
He said this was because while prices have improved, energy companies that focused on other markets over the last 12 months have not yet seen a reason to return to Wyoming.
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“There’s other places around the country where it’s just more profitable to be drilling,” Robinson said.
“They’ve moved to Oklahoma, to Texas,” he said. “They’re going to stay there for a while.”
The initial drilling is done to make it easier to quickly begin serious production if prices jump or if obstacles emerge in the other regions where energy companies are currently focused, Robinson said.
If prices continue to rise or the market clearly stabilizes, Wyoming may see jobs and equipment purchases return.
The Wyoming MACRO Report, released in mid-January, notes that jobs are still down about 3.1 percent from the same period last year. 3,600 of those lost jobs came from the mining industry.
Natural gas production was down 10.8 percent and oil production down 16.3 percent. Coal remained the hardest hit, with production having fallen 20.6 percent compared with 2015.
Severance tax revenue was 15.3 percent compared to the previous year.
The report noted conditions did not appear to be worsening in the labor market or elsewhere in Wyoming’s economy, despite the lack of growth.
Robinson said this has been the case since late summer.
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