A recent story on NewsOK.com makes the obvious point about the massive loss of value of energy companies here in Oklahoma given the worldwide glut of fossil fuels.
The basic point is that when there’s a glut of oil the price for oil drops, and then the value of the companies that extract it also declines. Duh. While the numbers might be important—a $113 billion drop total for companies in Oklahoma—the article itself doesn’t shed any real light on the fundamental problematics the vaunted energy industry has brought to this state since statehood.
Here’s the caveat statement: Oil and gas companies are really important to the Oklahoma economy. Here’s the reality statement: Oil and gas companies are TOO important to the Oklahoma economy.
The story does mention diversification in terms of personal and institutional financial investment in energy stocks, but it doesn’t really tackle the thorny issue of why oil and gas companies here are unable to plan production amounts in a reasonable manner. The boom and bust cycle brought to us by our romantic swashbuckling wildcatters the conservatives love so much—primarily, old, conservative white men—has made this state’s economy a crazy roller coaster that never stops.
The most obvious reason oil and gas companies don’t forecast price amounts appropriately is greed, and that’s not hyperbole. Let’s say there’s a boom on because of a refinement of extraction techniques, such as hydraulic fracturing and horizontal drilling. Loan money is flowing from banks protected by everyone’s tax dollars. Drill, baby, drill. Why care about the future as the crude accrues? It’s human nature. The big shots at the oil and gas companies making the decisions are earning millions or even billions of dollars. They have nothing personal to lose on the reality level when it comes to their standard of living when the boom goes bust as it always will until the last drop of oil is sucked from the ground or until global warming because of the burning of carbon emissions destroys the planet.
But most of us here in Oklahoma do have a lot to lose because of this so basic of basic selfishness and greed. Oklahoma, for example, is facing a budget shortfall next year estimated at $1 billion. There might even be a financial crisis this fiscal year forcing immediate and drastic cuts to state agencies. I’ll go out on a limb here and say it’s going to happen. Much of this financial chaos—it’s also true that Oklahoma legislators and leaders have a wildcatter speculative method of creating budgets—is because of a drop in tax revenues generated directly and indirectly by the energy industry. That includes everything from a drop in gross production taxes to a decline in sales taxes. It’s all happening even as I write this. Read about it here.
The entire saga of Oklahoma is about its failure to diversify its economy. Maybe it simply can’t for reasons ranging from its climate and extreme weather events that stem people from flocking here to live to the prevailing distrust of intellectualism by religious fundamentalists. We take what we can get here, right?
What’s depressing is that nothing on any level is going to happen to diversify the economy right now because conservatives dominate state government. Oklahoma could develop a master plan to increase its renewable energy output and bolster its educational systems, making it a more financially predictable and enlightening place to live and do business, but that would be forward thinking. This state officially deploys that in very small incremental amounts, and we’re in a big downslide right now when it comes to forward thinking.
As for the dangerous, extreme weather, well, at least we now have all these induced earthquakes to take our minds off it thanks to our devalued oil and gas companies.