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Wyoming not yet registering impact from Biden oil and gas policies with mineral tax collections up

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CASPER, Wyo. — Tax revenue from Wyoming mineral production has been outpacing the state’s projections, according to the Consensus Revenue Estimating Group’s April update.

While some Wyoming politicians have expressed concern about oil and gas policies on federal lands under the administration of President Joe Biden, if Biden oil and gas policies are having an impact on Wyoming oil and gas production that isn’t yet showing up in the production and tax collection data.

The number of oil and gas rigs active in the state under Biden in 2021 is in line with the number active under former President Donald Trump during his last April in office.

The April CREG report says there were seven oil and gas rigs operating in April, with six seeking oil: “The number of oil rigs is identical to April 2020 but down from 25 in mid-April 2019.” Wyoming’s rig count plummeted in spring 2020 as oil prices plummeted as a Saudi Arabian and Russian price way erupted in early March.

In early August 2020, Wyoming Governor Mark Gordon said that there was temporarily no rig activity in the state for only the second time since 1884.

Federal mineral royalty collections in Wyoming were $31.3 million ahead of the January forecasts through March 2021, without counting coal lease bonus payments. The April CREG report says that is 8.6% ahead of the forecast pace. Severance taxes from mineral production was $43.4 million, or 10.7% ahead of pace through March.

However, the April CREG update notes that the revenue collections they provide “are generally limited to production through January.” While oil and gas pricing and production has been outpacing their January CREG projections, the April CREG update says that the impact on Wyoming from the Biden administration’s federal leasing moratorium and cancellation of federal lease sales “is yet to be seen.”

The April update indicates that the better than expected mineral production and revenue picture was driven by oil and gas production and pricing and better than expected trona production. Surface coal production has been on pace with the January CREG forecast

Severance taxes being generated to the General Fund are $13.6 million ahead of pace. Oil production was 7.9% ahead of forecast pacing through Jan. 2021 and natural gas production was 3.3% higher than expected. Trona production was 4.9% ahead of pace.

“Wyoming natural gas prices through January production average $2.77/mcf, or $0.27 higher than the CREG forecast,” the April CREG update states. “Furthermore, Wyoming natural gas spot prices in February were substantially higher than the CREG forecast, with the monthly average price at the Cheyenne hub recording $19.29/mcf and at the Opal hub recording $17.23/mcf.”

“While these prices reflect spot prices, not actual prices received by Wyoming producers, these prices suggest higher than forecast natural gas tax and royalty collections may be forthcoming and are not yet incorporated into the actual revenue collections to date.”

Wyoming spot crude oil prices for the spring are exceeding the CREG forecast of $40 per barrel.

“The average price of Wyoming oil for FY 2021 through January production is $38.82/bbl, or $12.28/bbl lower than the same point in FY 2020,” the April CREG updates states. “Natural gas prices received by Wyoming producers are averaging $2.77/mcf for the current fiscal year through January production, as compared to the January 2021 CREG forecast price of $2.50/mcf. There is a single natural gas rig operating in Wyoming, compared to none at this time last year.”

“Statewide average surface coal prices through March severance tax collections are $12.41/ton, quite close to the January 2021 CREG weighted forecast of $12.28/ton.”

Federal mineral royalties and lease income and royalties from school lands and minerals supports K-12 education in Wyoming. School Foundation Program revenue is $11.4 million ahead of the January CREG forecasts.

The January CREG report forecast that sales and use tax collections would be down 7.3% during fiscal year 2021 compared with FY 2020. However, the sales and use tax collections are outpacing that projection by about $18.1 million.

“Put differently, while FY 2021 sales and use tax collections are still on pace to fall short of FY 2020 levels, the FY-over-FY difference is narrowing,” the April CREG report states. “Furthermore, recent collections do not yet account for potentially increased consumer spending, stimulated by the most recent round of direct individual payments from the American Rescue Plan Act (ARP Act).”

The April CREG update states that counties which rely heavily on mineral production or pipelines have tended to see declines in sales and use tax collections while there has been “strength in counties with greater economic diversification, especially those with current wind projects or impacts from tourism.”

“Looking at collections by major industry, the greatest FY-over-FY weakness in sales and use tax collections is found in the mining sector at negative 61.4 percent,” the April CREG report states. “Accommodations and food services are off last year’s pace by 13.2 percent. Collections from retail trade exceed last fiscal year’s collections by 1.8 percent, with online sales outperforming last fiscal year’s collections by 35.0 percent, through March. Finally, notable strength is evident in the public administration category, a major contributor of which is vehicle and trailer sales since sales and use taxes are paid with licensing and registration to the county. This category is up 11.5 percent FY-over-FY.”

Overall, the April CREG report said that collections directed to the state’s General Fund were $45.5 million ahead of the January CREG projections. The Budget Reserve Account is exceeding the forecast by $25.7 million, or 16.2%.

“This means that the GF/BRA are $71 million ahead of pace, before considering an additional $25.2 million in net capital gains from ‘Pooled
Income,'” The April CREG update states. “Revenue directed to the School Foundation Program outpaces the forecast by $11.4 million, or a more modest 3.2 percent, while the revenue directed to the School Capital Construction Account is falling short of the January 2021 CREG forecast by $333,675, or 1.2 percent, due to state royalties modestly lagging CREG’s forecast. Finally, if the fiscal year were to end in April 2021, $61.8 million in investment income would be deposited into the Strategic Investments
and Projects Account (SIPA) and a like amount into the Legislative Stabilization Reserve Account (LSRA).”


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