By Janelle Stecklein
CNHI State Reporter
OKLAHOMA CITY — Even though President Donald Trump continues to celebrate the drop in oil prices, Oklahoma officials cautioned that plunging prices are not necessarily a good thing for the economy.
“It’s not such a good thing overall,” said Chad Warmington, president of the Oklahoma Independent Petroleum Association-Oklahoma Oil and Gas Association, a trade group that represents producers. “It hurts the national economy in much broader ways than the president may give credit. It’s not just about pump prices.”
But that economic reality hasn’t stopped Trump from tweeting enthusiastically about the lower prices, which analysts report have fallen nearly 30 percent since peaking in early October.
“Oil prices getting lower,” Trump tweeted Nov. 21. “Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82. Thank you to Saudi Arabia, but let’s go lower!”
Then on Nov. 25, he tweeted, “So great that oil prices are falling (thank you President T). Add that, which is like a big Tax Cut, to our other good economic news. Inflation down (are you listening Fed!)."
On Dec. 5, Trump tweeted: “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!”
“Cheering on OPEC is not really what our economy needs,” Warmington said. “But it’s an easy misconception.”
Oil prices, meanwhile, rose Friday as OPEC members and Russia announced plans to cut production by more than 1 million barrels a day in January in hopes of boosting prices. On Friday, the price of crude reached as high as about $54 a barrel, up about $2.
Warmington said people enjoy relief at the pump, but said the economy is so much more impacted by oil and gas production than many people understand.
He said the national economy has benefited from the shale and horizontal drilling boom and increased activity. The president’s philosophy may be shortsighted if he’s simply focusing on the price at the pump, he said.
The United States is now the No. 1 exporter of oil and gas — surpassing both Russia and Saudi Arabia, he said.
And in Oklahoma, nearly 1 in 7 jobs is linked to the industry, which accounts for about a quarter of all state revenue, he said.
“As goes the oil and gas industry, so goes the Oklahoma economy,” Warmington said.
Gov. Mary Fallin sighed this week when asked about Trump’s tweets.
“He wants to bring it down even more,” she said of the price.
“Oklahoma right now has some of the lowest gasoline prices in the nation, which is good for the consumer. (It’s) not always good for the budget and the revenue that we collect.”
During Fallin’s eight-year term, she watched the price of oil seesaw from $107 to $26 a barrel.
When prices tanked in the middle of her term, nearly three-quarters of rigs stopped operations and almost 26,000 Oklahomans lost jobs tied to the energy industry, Fallin said.
Oklahoma has diversified its economy in recent years, but oil and gas remains the largest industry because of its economic output of about $66 billion annually, Fallin said.
“Energy will always have an impact,” she said. “The price of oil, all the international policies, the domestic things that happen in the United States will affect our economy because we’re very blessed to have a lot of natural resources. And, it affects other states, too, by the way.”
She said there comes a point when low prices can hurt the economy.
State officials are waiting to see how the recent drop in prices will impact the state budget, said Shelley Zumwalt, a spokeswoman for the Office of Management and Enterprise Services, which assists the governor’s office on budgetary matters.
Officials will receive preliminary estimates for the upcoming budget year later this month. Typically, there’s about a two-month lag before falling oil prices are reflected in Oklahoma’s tax collections, she said.
The current budget expects oil to sell for $53.08 a barrel, she said. Unless there’s a sustained drop in prices, most of the impact will likely be felt in the coming budget year.
“Overall, we’re still a top-tier state for energy price dependence,” she said. “Although gross production revenues don’t represent as large a chunk of our budget as they once did, most economists estimate a pretty substantial multiplier effect on other revenue streams — such as income taxes and sales taxes — when we have a sustained price downturn.”
Stecklein covers the Oklahoma Statehouse for CNHI's newspapers and websites. Reach her at firstname.lastname@example.org.