The Consensus Revenue Estimating Group’s October report, released by the state of Wyoming on Wednesday, shows all major revenue for the state exceeding January’s forecast by $329.4 million.
The Wyoming Consensus Revenue Estimating Group (CREG) said the state’s revenue picture looks brighter than it used to be. According to the new October report all major revenue for the state exceeding January’s forecast by $329.4 million. Revenue estimates for the 2023-24 biennium has also increased by $738.8 million since the group’s January forecast.
The CREG met on October 12, 2022. This meeting was preceded by the minerals valuation subgroup meeting on September 27, 2022.
Wyoming Governor Mark Gordon issued a media release in response to Wednesday’s release of the Consensus Revenue Estimating Group October report. Gordon welcomed the good news of higher-than-expected state revenue forecast but stressed a fiscally conservative approach to utilizing the funds, most of which should be considered one-time in nature.
“I am heartened by the higher-than-forecast state revenue picture reflected in the October CREG Report,” Gordon said. “However, this welcome news is not cause for excessive celebration or reason to relax our fiscal conservatism. We must remember that there has been a lot of volatility in our mineral revenues over the past few years, and that remains a concern for our future.”
Mineral Price and Production Estimates
Increased prices for oil, natural gas, coal, and trona headline the revisions to the October 2022. The CREG report found that during the last fiscal year, the General Fund and Budget Reserve Account, the primary source of funding for state programs and services received an additional $109.4 million in federal mineral royalties, $103.5 million in severance taxes, $49.4 million in sales and use taxes and $45.8 million more from investment income, than forecasted.
The January 2022 CREG report preceded the Russian invasion of Ukraine as well as the associated sanctions imposed by much of the Western world. Volatility in the supply of oil and gas increased prices for these commodities.
The price of coal also has remained high, reaching its highest levels in more than a decade. Fossil fuels, the state’s primary revenue stream, recorded near-term lows from 2015-2016. Since then, oil and natural gas have mostly recovered.
However, a major downturn came due to the COVID-19 pandemic, when Wyoming’s oil production fell from over 9 million barrels in January 2020 to around 5 million barrels in May of that year. In 2021, oil production dropped again.
The number of oil rigs in Wyoming has fluctuated between 12 and 15 for most of this year but has increased to 21 rigs this fall. While this number of rigs is still below pre-pandemic levels, it is significantly higher than between September 2020 and May 2021.
In addition, the report emphasizes that the growth of alternative energy is likely to hinder Wyoming’s oil and gas industry.
“Wyoming continues to face a series of headwinds from a variety of factors, including a federal energy policy and misguided investment mandates that are hostile to our state’s primary industries. This is the time when Wyoming must look to her future and make wise investments that will bear fruit for future generations.” Gordon highlighted.
The Governor will release his supplemental budget proposal on November 18.
________
Main sources: Cowboy State Daily, Wyoming State Government Revenue Forecast, Governor Mark Gordon website, The Cheyenne Post, Sheridan Media https://cowboystatedaily.com/2022/10/27/creg-report-wyomings-coal-oil-and-gas-revenues-come-in-much-more-than-expected/
