NEW YORK, Oct. 14 (UPI) -- The low price of crude oil is starting to eat away at the revenue stream for U.S. states that depend heavily on the energy sector, Fitch Ratings said.
West Texas Intermediate, the U.S. benchmark for crude oil prices, closed Tuesday at $46.66 per barrel, down about 45 percent from one year ago. That's forced energy companies to cut staff and spending on exploration and production in an effort to navigate the downturn.
Fitch Ratings said that, as crude oil prices struggle to break the psychological threshold of $50, revenue streams are drying up for states that depend heavily on oil.
"Stagnant commodity price trends are dampening energy states' economic growth and are eating into economically sensitive revenue sources such as sales and personal income taxes," Senior Director Marcy Block said in a statement.
An August report from the Dallas Federal Reserve said regional economic metrics indicated mostly positive momentum, "except in the energy sector." Fitch Ratings said earlier this year some Texas cities like Houston, which hosts the headquarters of several major energy companies, were pressured by the weak crude oil market.
Beyond Texas, the No. 1 oil producer in the nation, Fitch said states with less diverse economies like Wyoming, Alaska and North Dakota, the No. 2 oil producer, will face the brunt of the pressure from low crude oil prices.
North Dakota Gov. Jack Dalrymple said last week the state's economy was managing the oil price downturn in part because of the emphasis on diversity that extended beyond the oil and gas sector.
The state has created 123,000 new jobs since 2004, a 36.6 percent gain, and personal income has increased by more than 40 percent.
Fitch said nevertheless that prolonged weakness in the oil economy will force states to revise their budget plans.
"Should the prolonged slump in commodity markets extend into fiscal 2017, we would expect states to identify fiscally prudent strategies to address vulnerable state revenue sources," Block said.