An Uneven Playing Field

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By Cole Lennon

Drilling can be thrilling—that is, until falling oil prices  hurt your state’s economy.  The eight oil-exporting U.S. states--Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, Wyoming, and West Virginia--will not enjoy the energy boom from recent years. One certainty of declining oil prices is that many oil drilling projects will be unprofitable and not move forward, and Scotiabank research indicates that the weighted average breakeven price is about $60 for most projects across the U.S. and Canada.  Sluggish oil revenues hurt the eight states who are net-exporters of oil.  The other 42 states, however, are seeing net gains.  Environmental economics researcher Stephen Brown estimates that the overall U.S. economy as well will get a 1% net boost in GDP this year due to cheaper oil.  The uneven effects of U.S. oil production will then be largely beneficial for the country as a whole.  Such a boon is not just a cheap thrill.

Sources

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