Falling gas prices may be a driver's dream, but states that depend on oil and gas revenue are worried about the effect the lower prices will have on their local economies, and are predicting layoffs and slashed agency budgets.
Oil-rich states such as Texas, Louisiana, Alaska, Oklahoma, and North Dakota, which is benefiting from the fracking boom, are bracing for the fall, reports The New York Times.
While economic disasters like the ones that occurred in the 1980s are not expected, times are about to get tougher, experts are warning.
Many of the states have worked to diversify their economies since the last oil bust, and are not expecting a crisis such as being experienced from Russia, Iran, Venezuela, and other high-export nations.
But Texas lost 2,300 oil and gas jobs during October and November, according to the federal Bureau of Labor Statistics, and more are coming as the year ends. In Houston alone, Hercules Offshore is planning to lay off about 300 employees who work on its Gulf of Mexico rigs at the end of the month.
Crude oil was at $54.73 per barrel on Friday, according to the West Texas Intermediate benchmark, down from more than $100 per barrel in June. In the 1980s crisis, oil prices plummeted to below $12 a barrel, costing Houston 221,000 jobs between 1982 to 1987.
Louisiana is projecting a $1.4 billion budget shortfall and has eliminated 162 vacant state positions, reduced contracts, and froze expenses, and more reductions are coming early in the year, reports The Times.
Meanwhile, Alaska may face a 50 percent capital spending cut for road projects, and the credit rating service Moody's has lowered the state's credit rating from stable to negative.
Louisiana's economy is less diversified than that in Texas, and is feeling the lower prices especially hard, with state chief economist Greg Albrecht noting the state loses $12 million in revenue for every $1 drop in the cost of a barrel of oil.
Texas, though, has widened its economy through additional industries, including health care, biotechnology, and software, reports The Times, and now, oil and gas jobs only make up about three percent of the state's nonagricultural jobs.
North Dakota could face delays in expenditures for highway and water projects, but the state only depends on only a small portion of the oil and gas money for its operations.
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