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Which States Stand To Lose The Most From The Crude Collapse

Tyler Durden's picture




 

By now, it is no secret that the one state that conventional wisdom expects to suffer the most as a result of the crude collapse is the one state that through the Great Recession was the primary provider of (well-paying) job creation, the same state which is now expected to enter into a full-blown recession as confirmed by Jeff Gundlach in his latest outlook call who, correctly, observed that all the jobs created during the "recovery" were thanks to the shale sector (something we presented previously).

But is it really Texas that will be impacted the most? The answer, at least according to a recent Pew report, is a resounding no.

As Stone McCarthy summarizes, the Pew report assessed the volatility in state tax revenues for the U.S. overall and for all 50 states. The analysts assigned a revenue volatility score to each state based on year-to-year changes in state revenues; the scores control for changes in state tax laws.

The volatility score for the U.S. overall was 5.0%; 29 states had higher volatility scores and 21 had lower scores. Three of the four states with the greatest volatility in revenues -- Alaska, North Dakota and Wyoming -- derive a large share of their revenue from so-called severance taxes on the extraction of oil, gas and other natural resources. Revenue from severance taxes in those states has been quite volatile, as the following chart shows.

Alaska, which had the highest volatility score by far at 34.4%, derived 78.3% of its revenue in 2013 from severance taxes, according to PEW. Severance taxes made up 46.4% of revenue in North Dakota in 2013, and 39.7% of revenue in Wyoming.

Incidentally, where is Texas? Smack in the middle.

So yes: in absolute terms, Texas may be facing a recession as a result of the retrenching of the energy industry - the biggest source of revenue for the state. However, in relative terms, when looking at state tax revenue volatility and reliance on energy, there may be some 25 or so state that stand to suffer even more than Texas!

Still think the crude crunch is "unambiguously" good?

 

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Tue, 01/13/2015 - 22:35 | 5658343 Publicus
Publicus's picture

Yes, cheap energy is unambiguously good.

Tue, 01/13/2015 - 22:39 | 5658354 Soul Glow
Soul Glow's picture

Cheap energy is a necessary component of consumerism.

Tue, 01/13/2015 - 22:44 | 5658374 Buster Cherry
Buster Cherry's picture

Yes, as long as a paycheck is coming in.

Tue, 01/13/2015 - 22:51 | 5658396 Soul Glow
Soul Glow's picture

Well then there would be no consumerism, would there.

Tue, 01/13/2015 - 22:58 | 5658430 Bay of Pigs
Bay of Pigs's picture

Well, there's always food stamps...

Tue, 01/13/2015 - 23:01 | 5658438 Soul Glow
Soul Glow's picture

Good thing you can eat 'em!

Wed, 01/14/2015 - 00:02 | 5658599 Barnaby
Barnaby's picture

Cheap energy feeds my stock at $7 per bale instead of $10 in 2011. It doesn't make it right, but my stock eat cheaper.

Wed, 01/14/2015 - 00:43 | 5658716 knukles
knukles's picture

Y'all aware that there are oil derricks, drilling right in the heart of LA?  Oil being pumped in the heart of LA?  In some up scale areas?  The operations are surrounded by facades, looking like any other office type structure.  Nah, we're all in for the 3 eyed toeded salamandered one winged bat shit crazy gnewt.

Wed, 01/14/2015 - 00:55 | 5658739 Barnaby
Barnaby's picture

They're actually pumps, and their orifices were riddled during periods of indiscretion, like fields of HPV on a virgin's twat.

Los Angeles drinks from tanks, pools and protected reservoirs so tightly guarded you can't so much as drop a dime on their surfaces.

Wed, 01/14/2015 - 01:33 | 5658804 The9thDoctor
The9thDoctor's picture

Correlation is not causation, but whenever gas prices are high, the economy on Main Street sucks.

I know the suit and tie guys are worried abut their oilwells not producing as much quarterly cashflow, and some roughnecks will get their F350 trucks repossessed because they'll now have to work at Walmart stocking shelves for $8 nothing an hour, but for the rest of the 99% of the country, it's a nice relief.

Wed, 01/14/2015 - 02:54 | 5658938 pgroup
pgroup's picture

There used to be an oil pump right on the campis of Torrance HS. And I remember one almost dead center in the parking lot of a mall somewhere in the South Bay (I can't remember which town).

And then of course there are the La Brea tarpits which have been giving off noxious fumes for decades (actually a lot more than that). And there are oil pumps all over Beverly Hills/Brentwood/Santa Monica.

But the real haha comes from those drilling derricks out in the Santa Barbara channel. One of them blew out back in '69 and the green freaks thought they were going to force Chevron or Shell or whoever owns them to shut down. Never happened and every few years I get to drive down PCH and see the rigs out one side and the bilionaires homes out the other. Sweet justice - all that money and they can't get rid of those "eyesores."

Tue, 01/13/2015 - 22:59 | 5658427 NoDebt
NoDebt's picture

Pennsylvania (my home state).... 4th from the bottom in terms of impact.  How can that be when it's always on the Tylers short list of most-impacted-states, along with Texas?

Perhaps I should shed a little light.  PA has a HUGE Nat Gas industry going on within it's borders but NO EXTRACTION TAX.  They're talking about it, but it hasn't happened yet.

Tue, 01/13/2015 - 23:02 | 5658439 Seek_Truth
Seek_Truth's picture

Exactly.

Looks like they'll be shelving the extraction tax talks- if they know what's good for them.

But when has gubmint ever known restraint?

Wed, 01/14/2015 - 00:15 | 5658645 Seasmoke
Seasmoke's picture

Good Luck with Tom Wolf in Sheep clothing. And a tribe member as well. He is a POS. Seasmoke has first hand knowledge of this liar.

Tue, 01/13/2015 - 22:39 | 5658357 MrPalladium
MrPalladium's picture

The trouble is our energy will be cheap only temporarily, and very expensive to replace going forward. Vastly higher labor and much higher capital costs than in the past.

Tue, 01/13/2015 - 22:47 | 5658387 Publicus
Publicus's picture

All costs are free except for labor. That is the signature of an advanced civilization, of which none exists currently.

Tue, 01/13/2015 - 22:51 | 5658407 KnuckleDragger-X
KnuckleDragger-X's picture

It really depends on the entire economy which has been twisted into a pretzel. Rosy Scenario and all her friends is telling everybody that will listen that this will be a fairly minor problem and otherwise things are just peachy. Unfortunately when you look at the broad commodity index, oil is only one small part of the problem and taken all together things will get rough. Our biggest problem are the clowns running the circus who will do everthing possible to squeeze the last dollar out before it all turns to shit.

Tue, 01/13/2015 - 23:25 | 5658503 Oldwood
Oldwood's picture

We have been watching these cycles for decades at least. The problem is the destruction of capital that these collapses cause. We will see more small companies fail and those with any residual value scooped up by the large companies. the only cost control we have is competition and with each cycle we lose more. Yes we will wallow in this cheap energy for a short while and when it comes back, it will come with a vengeance when we can least afford it after suffering yet another recession/depression. Market instabilities are killing our economy, with each cycle, more and more wealth getting further concentrated into fewer and fewer hands.

Tue, 01/13/2015 - 22:48 | 5658394 sun tzu
sun tzu's picture

Wait until US producers go bankrupt and see how cheap energy will be when the Saudis are back in control

Tue, 01/13/2015 - 22:59 | 5658433 Publicus
Publicus's picture

Then the US producer now owned by the banks who is bailed out by the taxpayers becomes the lowest cost producer.

Wed, 01/14/2015 - 03:15 | 5658964 Bloppy
Bloppy's picture

Boston.com on Boehner poison plot: 'perhaps his pickled liver could have filtered out the toxins':

http://tinyurl.com/o8gse84

Tue, 01/13/2015 - 22:42 | 5658362 Buster Cherry
Buster Cherry's picture

As everyone will find out soon enough.

Tue, 01/13/2015 - 22:45 | 5658373 Groundhog Day
Groundhog Day's picture

When will the generational wars begin. Them old folks better watch out

Tue, 01/13/2015 - 22:46 | 5658382 Whoa Dammit
Whoa Dammit's picture

A lot of the cattle ranchers in the west have been kept afloat only by using fracking revenues to pay for high hay costs.

Also the only "good" bank in the country is The Bank of North Dakota (state owned).

Sadly neither will fare too well with the collapse of oil prices.

Tue, 01/13/2015 - 22:52 | 5658405 Doomzdaze
Doomzdaze's picture

FrackenA

Tue, 01/13/2015 - 22:58 | 5658431 Soul Glow
Soul Glow's picture

The Bank of ND is a shitshow.  You'll want to read up.

 

Adventures in Nationalization with the Central Bank of North Dakota

http://www.zerohedge.com/article/adventures-nationalization-central-bank...

Tue, 01/13/2015 - 23:19 | 5658491 Whoa Dammit
Whoa Dammit's picture

So I take it that you prefer the banker owned Fed?

Wed, 01/14/2015 - 03:42 | 5658997 teslaberry
teslaberry's picture

just cause you don't like the fed, doesn't mean other bank charter owners, including a state government run by its executives, cannot fuck things up just as bad or worse. 

 

leadership is what leadership does. 

 

'public banks' aren't good just because they are 'public'. if the leader of a public body makes a reliable and good leader for the bank than that is what defines good . there are no apriori assumptions to be made about who and what is better. 

 

the soviet union had its own public bank. wasn't that great for the russian peopel? 

Tue, 01/13/2015 - 23:23 | 5658502 Barnaby
Barnaby's picture

That's ridiculous. Hay's gone up less than the price of milk, eggs or cheese, even in the desert.

Tue, 01/13/2015 - 22:52 | 5658406 fibonacci's claus
fibonacci's claus's picture

STOP THE ILLEGAL AND UNCONSTITUTIONAL RESTRAINT OF TRADE OF THE U.S GOVERNMENT !

 

OUT SOURCE OBAMACARE TO IRAN !

Tue, 01/13/2015 - 22:53 | 5658410 Barnaby
Barnaby's picture

What we lost in barrels
We make up doubly in blunts
~ The state of Colorado

Tue, 01/13/2015 - 22:58 | 5658425 max2205
max2205's picture

No Moar frackquakes...yeah

Tue, 01/13/2015 - 23:04 | 5658446 blown income
blown income's picture

Well Louisiana depends heavily on royalties from oil and gas..

 

Broken record again ...Lafayette and the surrounding areas are nothing but oil & gas service ,retail , way the fuck overpriced housing

And sugar cane fields ...

 

Shit is to fucking expensive here and it's all to oil & gas and I don't give a fuck what people say , everyone is shifting there paints cause they don't know if in 2 months they will have a job to pay for all the over priced Shit, clothes, Ieat's, boats, campers, vehicles. ..etc

I go out on a limb and say people thinking it won't happen to me ..

I have been with X X X 16 years..

Product cut 50% you can bet employment will be as well..

 

 

 

 

They keep building retail here like it's Houston and 10 million a month moving here...shitz  getting real from how I see it.

 

 

Tue, 01/13/2015 - 23:13 | 5658447 blown income
blown income's picture

Fuck the Fed 

 

Tue, 01/13/2015 - 23:07 | 5658454 The Shape
The Shape's picture

QE4 coming by November.

Wed, 01/14/2015 - 00:25 | 5658669 yogibear
yogibear's picture

Of course.

After that QE5.

US has become Japan. 

 

Tue, 01/13/2015 - 23:09 | 5658463 cigarEngineer
cigarEngineer's picture

wtf is Florida doing so high on that list

Tue, 01/13/2015 - 23:18 | 5658492 Barnaby
Barnaby's picture

Well, remember what the Oil-verglades used to be called? I guess Erin Brockovitch's firm is suing to put the old name back.

Tue, 01/13/2015 - 23:58 | 5658591 hooligan2009
hooligan2009's picture

ah hah! i predict (maybe bravely) that alaska is now the equivalent of greece.

fubar

followed by ...no wait..aim i allowed to say that all Europes problems have an exact mirror in the US?

Wed, 01/14/2015 - 00:06 | 5658614 kchrisc
kchrisc's picture

Going to be a lot of pissed off white folks ready to "vote" neo-con in 2016--Right on plan, and schedule.

The banksters need to repay us.

 

CIA-Obama == neo-con manchurian puppet, and Oval Office warmer.

Wed, 01/14/2015 - 00:10 | 5658623 Salah
Salah's picture

New Mexico has America's 3rd largest O&G sovereign wealth fund (after AK & TX); and now its take from copper is getting hammered:        http://finviz.com/futures_charts.ashx?t=HG&p=d1

Wed, 01/14/2015 - 01:06 | 5658765 punkasscrab
punkasscrab's picture

I work the field in many states and while Alaska is most dependent on oil for tax revenue Most of her citizens are not employed in the industry. Most people in ND and Wyo are at least indirectly employed by oil industry. If the prices don't rebound I think this could be the spark that starts THE collapse.

Wed, 01/14/2015 - 01:28 | 5658793 azusgm
azusgm's picture

Here in NE Texas, the economy is heavily dependent on O&G. The largest taxpayer in the school district is a coal-fired power plant. The EPA is after the power plant and the Saudis are after our shale oil and gas industry. We have frack sand mined here and folks geting money off disposal wells. O&G companies are finishing out their one-year drilling/fracking plans and after that, the drilling/fracking come to a halt. The companies will produce from their existing wells to maintain liquidity instead of choking them down.

And now our school board wants to pass a general obligation bond for new schools mostly because they have not properly maintained what they have. Brilliant. The local economy is heading into a dive and they want to pass a tax obligation that will rise in rate as the taxable base falls.

Could this be a problem?/sarc

Wed, 01/14/2015 - 01:43 | 5658825 The9thDoctor
The9thDoctor's picture

I don't doom on a collapse.

There are many, many ghost towns in Nevada because mines have closed down, but life goes on.

One packs up and moves on to the next opportunity.

North Dakota was a great opportunity in the late 2000s, but that bull ride is over.  Most people in the Dakotas live in trailers or temporary housing anyway so now they can move back home with the cash they got from these fracking jobs.

I find it funny on Zero Hedge, that most of the posters anticipate this apocalyptic level collapse, when all there are, are new opportunities.  For a financial blog, more people should be commenting on new opportunities to build wealth instead of dreading the end.

That's why metalbugs who bought gold at $1500+ are broke and miserable now, sitting on stacks of expired storable foods, and the "paperbugs" are moving on to the next opportunity.

Wed, 01/14/2015 - 02:26 | 5658904 cigarEngineer
cigarEngineer's picture

Exactly. The history has already been written. It's not going to be a Rambo scenario; it's going to be Japan.

Also, one thing: most people are not experienced enough to save significant money, especially the first or second time they're making a lot of it. I would bet every penny that the number of people in ND who saved their money is very small. Almost all of them have never made that kind of money before. The people lucky enough to have farms leased out to oil companies have already blown all their money buying brand new pickup trucks, ATVs, etc. No discipline whatsoever. When the wells deplete 90% in three years, those bills will pile up and everything will be reposessed.

Wed, 01/14/2015 - 04:03 | 5659020 muleskinner
muleskinner's picture

With any luck at all, the price of oil will be at ten dollars by June.

One for the books, Jews shouting 'niggers go home':

http://www.mintpressnews.com/watch-israelis-chant-nggers-go-home-carryin...

Wed, 01/14/2015 - 07:48 | 5659229 youngman
youngman's picture

Yes as long as you buy it from someone else...but if you are a producer..not so much..and we now are producers...

Wed, 01/14/2015 - 08:39 | 5659305 Money_for_Nothing
Money_for_Nothing's picture

Yes cheap oil is good. Only way to get rid of the pointed hair boss and egg head CEO.

Tue, 01/20/2015 - 10:20 | 5683423 rsnoble
rsnoble's picture

So does mean that state gov'ts will finally downsize? LMAO.  NO.  It means more taxes on those left working.  The system will eat itself alive.

According to the chart it looks like nearly all 50 states are FRACKED. LOL. (Also a Battlestar Galactia reference.  At least they picked a good man to lead them away from this shithole).

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