oil

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Transcript

ROBERT SIEGEL, HOST:

In Oklahoma, the economy runs on oil. The energy industry drives 1 in 5 jobs and is tied to almost every type of tax source. So falling oil prices have created a state budget crisis. Joe Wertz of State Impact Oklahoma sent this report.

This day is starting out really nasty if you happen to be an oil driller — or a baby boomer who would like to retire with a nest egg.

Through the night and into the morning, the price of oil has been falling. You can now buy a barrel for less than $30. (Remember, it was nearly $115 as recently as June 2014.) The market for oil has been thrown into disarray because of worries about possible declining Chinese demand and surging Iranian supplies.

That means U.S. oil producers will continue to see their profits plunge and industry layoffs worsen.

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Joe Wertz / StateImpact Oklahoma

Thirty-six people in Oklahoma have died in crashes “involving trucks hauling oilfield wastewater and equipment” over the last eight years, The Frontier and News9 report.

There were high-fives this week from Detroit to Washington, D.C., as carmakers celebrated record auto sales.

Americans bought 17.5 million cars and trucks in 2015. That's a huge turnaround from 2009, and the Obama administration cheered the rebound as vindication of the president's decision to rescue General Motors and Chrysler from bankruptcy.

"Because of the policy decisions that were made by this administration to place a bet on those workers, America has won, and our economy has been better for it," White House spokesman Josh Earnest told reporters Wednesday.

Like cheap gasoline?

Then you're in luck. Experts say gas prices very likely will keep falling. That's because a report released Wednesday showed a sharp increase in gasoline inventories.

The U.S. Energy Information Administration said that last week, companies added another 10.6 million barrels of gasoline, creating the biggest surge in supply since 1993. That added to fears that supplies will far outstrip demand for a long time.

Oh, the irony.

Historically, when political tensions increased in the Middle East, the price of oil rose too. Buyers of oil worried that conflicts could interrupt drilling or interfere with oil-tanker access to waterways. In theory, when risks rise, so do prices.

But in recent days, even as tensions have been growing between two key oil producing nations — Iran and Saudi Arabia — oil prices have been falling. They slipped below $36 a barrel on Tuesday.

Why?

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Transcript

Joe Wertz

A $900 million hole in next year's Oklahoma state budget and a projected shortfall for the last six months of the current fiscal year could deepen if the price of oil and natural gas stays at low levels not seen for more than a decade.

The price of oil has hovered around $35 per barrel for nearly two weeks; forecasters predict an average price of $42.83 through June 30. The projected price of oil for the fiscal year that begins July 1 is $53.57 a barrel, according to the Oklahoma Tax Commission.

Joe Wertz / StateImpact Oklahoma

Oklahoma budget officials this week sounded a dire financial alarm: Low oil prices have driven state government revenues to failure. Three of the state’s top finance leaders met with reporters on Thursday to detail the shortfall.

Crude oil has dipped below $35 a barrel, the lowest price since February 2009 — the last year a revenue failure was declared in Oklahoma. Plunging oil prices are pulling down nearly every one of the state’s major sources of tax revenue.

The total estimated budget hole: Around $1 billion.

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