6 of the 8 Biggest Oil-Producing States in the U.S. Are Now in Recession

6-oil-states-in-recession

Recession swamped six of the eight biggest oil-pumping U.S. states in 2016, according to a new report that illustrates the damaging effects of the global commodity’s slide on American energy.

Despite recent gains in oil prices following the Organization of the Petroleum Exporting Countries’ decision to cut production, petroleum’s rough ride in 2016 tripped Alaska, Louisiana, New Mexico, North Dakota, Oklahoma and Wyoming into recession, according to the S&P Global Ratings report.

The report, which estimated economic output for 2016, concluded that Texas and Montana barely avoided recession with slight increases in growth.

Seven of the eight states ranked in the bottom 10 in job creation, with only Texas, at No. 23, escaping that dubious distinction.

Employment opportunities, state budgets and economic growth have contracted, accordingly.

The development comes as the energy industry hopes for action by President Trump to open up new federal lands for production and lift environmental restrictions on pumping. But those prospective moves, while potentially helpful for long-term growth, could portend short-term challenges if they spark further price declines.

The price of West Texas Intermediate crude oil, the U.S. benchmark, was up 0.7% to $53.11 at 8:52 a.m.

The pain is particularly sharp in North Dakota. The state’s economy had flourished with the tremendous upswing in American oil and gas production over the last several years, but has taken a sharp turn for the worse. North Dakota lost 2.9% of its jobs in 2016 and its economy shrunk by 8.4%, according to the S&P report.

The only good news is that OPEC’s oil-pumping cuts helped stabilize the commodity after its precipitous drop to below $27 per barrel at one point in February 2016 amid a global glut of production.

Plus, there’s a general consensus that energy companies have little room left to cut after a year in which several dozen producers filed for bankruptcy and laid off thousands of workers.

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SOURCE: USA Today, Nathan Bomey