Economic growth shows signs of slowing
October 17, 2019
CASPER — Wyoming’s economic growth has started to show subtle signs of slowing, a new quarterly report published by the state’s Economic Analysis Division shows.
Though statewide employment rates have remained strong, increasing by 1.3 percent compared to last August, coal and natural gas production continue to falter.
Despite enduring positive signs in the overall economy, Jim Robinson, principal economist for Wyoming’s Economic Analysis Division, is keeping a close eye on the limited aspects of the boom in some counties. A majority of economic growth was powered by construction tied to oil and wind energy development, particularly in Converse County.
“We actually have very one-dimensional growth,” Robinson pointed out. “For the most part it’s limited to construction. It’s showing up in that one sector and has to do with pipeline construction, power communications, wind power transmission lines and roads.”
Oil has exhibited signs that it will continue unabated, though no additional job gains have been made this year, compared to last.
“Oil is doing fantastic in terms of production,” Robinson said. Crude production shot up a whopping 17 percent as of July in the state.
In terms of overall mining activity, the industry reported the largest loss of jobs compared to other sectors. The industry clocked 1,400 less jobs in August than it did last year.
The shuttering of the Eagle Butte and Belle Ayr mines by bankrupt coal operator Blackjewel left hundreds of workers without jobs. Demand for coal continues to wane as utilities reconsider energy portfolios in favor of renewables or natural gas.
This year, the state has pumped out 9 percent less coal than it did by this time in 2018. Meanwhile, prices have stayed fairly steady in 2019. Powder River Basin coal has sold at an average price of $12.33 a ton so far this year.
Less mineral extraction translates into less revenue for the county and state. State severance tax collection decreased by nearly 8 percent, or $12.6 million, during the first three months of this fiscal year, compared to the last. However, sales and use tax collections from the mining sector enjoyed an uptick of 10.6 percent.
The loss of severance tax revenue could be a red flag, or a sign of impending fiscal trouble. But it’s not just from the downtrend in coal.
“Everyone is aware about the problems that coal is having,” Robinson said. “... But I think that discussion hides what’s happening with natural gas, which is another big player for Wyoming.”
The report revealed significant year-over-year decreases in natural gas production. Production dipped by 11 percent compared to August 2018, even more than coal.
According to the report, the local economies of Casper and Cheyenne may soon slow down, too.
“I don’t want anyone to think that they’re not growing,” Robinson clarified. “What’s happening is that these economies are still growing, but the growth rate has shrunk.”