Wyoming, North Dakota, Louisiana, New Mexico, Kansas, Oklahoma economies declined
The oil industry downturn has affected not only E&Ps and service companies but also the major energy-producing U.S. states, according to a note from the Federal Reserve Bank of Kansas City. Only six states have seen economic activity decline from September 2015 to September 2016: North Dakota, Louisiana, New Mexico, Kansas, Oklahoma, and Wyoming. While these are not the only energy-producing states in the U.S., the energy industry makes up a major portion of the economies of some of these states.
As the map published by the Fed shows, Wyoming, Louisiana and North Dakota have seen the largest decline in economic activity in the measured period. Oklahoma, Kansas and New Mexico have also seen economic declines, while all other states have seen growth.
This period corresponds to the worst part of the downturn, as WTI prices dropped to $26.21 on February 11, 2016. Most states saw rig counts bottom out over this period as well, as companies paused operations in the difficult price environment. In fact, rig activity stopped in Kansas altogether in mid-2016 and the current rig count in the state remains zero.
Data: Baker Hughes Graph: EnerCom Analytics
Wyoming was the first state in the KC Fed’s district to be affected by the downturn in oil prices, shortly followed by Oklahoma, New Mexico and Kansas. As of September 2016, Wyoming was the only one of these states to have exited its recession. Overall, it appears that states with energy as a major portion of the overall economy experience recessions differently than other states. Energy-producing states enter and exit national recessions later than other states. Additionally, energy producing states experience shorter but more frequent recessions.
