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Oklahoma says economic recovery under oil price pressure

Most indicators point to continued growth, but the pace might depend on the direction of crude oil prices.

By Daniel J. Graeber
Oklahoma says economic recovery under oil price pressure
Oklahoma sees signs of general economic recovery, but the pace of growth is tied to what happens with crude oil prices, the state treasurer said. File photo by Gary C. Caskey/UPI. | License Photo

July 11 (UPI) -- The state economy in Oklahoma has recovered from recession, though momentum could be hindered by lower oil prices, the state treasurer said.

Oklahoma accounts for as much as 5 percent of the total national output of crude oil, making it one of the more significant oil producers in the nation. It's the fifth-largest shale natural gas producer in the country.

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Spending in Oklahoma shale basins declined last year during the market downturn, putting a strain on state coffers.

Federal data show Oklahoma's economy expanded by 1.3 percent during the fourth quarter, ending four straight quarters of contraction. State data on gross production taxes on oil and natural gas show collections of $41.6 million in June, up more than 60 percent from the previous year.

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"Current data is encouraging with lagging economic indicators showing improvement in the state economy," State Treasurer Ken Miller said in a statement.

Late last month, however, Oklahoma Gov. Mary Fallin expressed concern because state fiscal planners were still dealing with an $878 million budget gap, only a minor improvement from the $1.3 billion hole last year.

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The 2018 budget is $37.7 million, or about a half percent, lower than the appropriated budget for this year.

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In a nod to a weakened energy market, where crude oil prices are still about half what they were three years ago, the governor said a 3 percent increase in gross production tax would help keep the state government open and running.

"Unfortunately, we missed an opportunity to reform our budget process -- to address structural imbalances in the budget, fix problematic tax policies, and access more recurring and stable revenue," she said last month.

For the fiscal year that ended in June, the government reported total gross revenue at $11 billion, down 1.5 percent from the previous fiscal year. Miller said the overall picture was somewhat optimistic, though the economy still tied to energy market factors.

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"Leading indicators... point to continued growth, but the anticipated strength of the recovery may be moderating as oil prices have come down slightly," he said.

West Texas Intermediate, the U.S. benchmark for the price of oil, is down more than 11 percent since the start of June.

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