An Energetic Decade: Economic Growth in the Western States, 2007 - - - PowerPoint PPT Presentation

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An Energetic Decade: Economic Growth in the Western States, 2007 - - - PowerPoint PPT Presentation

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Texas Comptroller of Public Accounts An Energetic Decade: Economic Growth in the Western States, 2007 - 2017 Presentation for WSATA September 25, 2018 Tom Currah Chief Revenue Estimator Texas Comptroller of Public Accounts Texas Comptroller

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Texas Comptroller of Public Accounts

An Energetic Decade: Economic Growth in the Western States, 2007 - 2017

Presentation for WSATA September 25, 2018 Tom Currah Chief Revenue Estimator Texas Comptroller of Public Accounts

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Texas Comptroller of Public Accounts

Overview

  • Shaming the Presenter: A Look Back at Last Year’s Forecast
  • A Brief History of Oil and Natural Gas Prices and Production
  • Energy and Economic Growth Since 2007
  • Economic Growth in WSATA States
  • Yet Another Attempt to Accurately Forecast Oil and Gas Prices

2

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Texas Comptroller of Public Accounts

Forecast From 2017 WSATA Presentation

  • Oil Prices rise to around $55/bbl over next two years
  • Natural Gas Prices remain relatively steady, around $3/mmbtu

in same period

  • Ready supply likely to hold prices in check

3

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Texas Comptroller of Public Accounts

Results

  • 2017 Forecast: $55/bbl over next two years

–Average Price Last 12 Months: $62.22 –Average Price, August 2018: $67.85

  • Natural Gas Prices around $3/mmbtu in same period

–Average Price Last 12 Months: $2.87 –Average Price, August 2018: $2.91

4

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Data Source: U.S. Energy Information Administration 5

50000 100000 150000 200000 250000 300000 350000 Jan-1920 May-1922 Sep-1924 Jan-1927 May-1929 Sep-1931 Jan-1934 May-1936 Sep-1938 Jan-1941 May-1943 Sep-1945 Jan-1948 May-1950 Sep-1952 Jan-1955 May-1957 Sep-1959 Jan-1962 May-1964 Sep-1966 Jan-1969 May-1971 Sep-1973 Jan-1976 May-1978 Sep-1980 Jan-1983 May-1985 Sep-1987 Jan-1990 May-1992 Sep-1994 Jan-1997 May-1999 Sep-2001 Jan-2004 May-2006 Sep-2008 Jan-2011 May-2013 Sep-2015 Jan-2018

U.S. Field Production of Crude Oil (Monthly, Thousands of Barrels)

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20 40 60 80 100 120 140 160 Jan-1986 Oct-1986 Jul-1987 Apr-1988 Jan-1989 Oct-1989 Jul-1990 Apr-1991 Jan-1992 Oct-1992 Jul-1993 Apr-1994 Jan-1995 Oct-1995 Jul-1996 Apr-1997 Jan-1998 Oct-1998 Jul-1999 Apr-2000 Jan-2001 Oct-2001 Jul-2002 Apr-2003 Jan-2004 Oct-2004 Jul-2005 Apr-2006 Jan-2007 Oct-2007 Jul-2008 Apr-2009 Jan-2010 Oct-2010 Jul-2011 Apr-2012 Jan-2013 Oct-2013 Jul-2014 Apr-2015 Jan-2016 Oct-2016 Jul-2017 Apr-2018

Oil Price, Monthly Average, $bbl

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$0 $2 $4 $6 $8 $10 $12 $14 $16 Jan-1997 Jul-1997 Jan-1998 Jul-1998 Jan-1999 Jul-1999 Jan-2000 Jul-2000 Jan-2001 Jul-2001 Jan-2002 Jul-2002 Jan-2003 Jul-2003 Jan-2004 Jul-2004 Jan-2005 Jul-2005 Jan-2006 Jul-2006 Jan-2007 Jul-2007 Jan-2008 Jul-2008 Jan-2009 Jul-2009 Jan-2010 Jul-2010 Jan-2011 Jul-2011 Jan-2012 Jul-2012 Jan-2013 Jul-2013 Jan-2014 Jul-2014 Jan-2015 Jul-2015 Jan-2016 Jul-2016 Jan-2017 Jul-2017 Jan-2018 Jul-2018

Natural Gas Prices, Monthly Average ($ Million Btu)

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10

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  • 10.0%
  • 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% Utah North Dakota Texas Colorado Washington Idaho California Massachusetts Florida New York Oregon South Carolina Tennessee Georgia South Dakota North Carolina Montana Minnesota Nebraska Nevada Virginia Hawaii Oklahoma New Hampshire Arizona Indiana Maryland Iowa Kentucky Michigan Delaware Pennsylvania Missouri Wisconsin Arkansas Alaska Ohio Rhode Island Louisiana Kansas Vermont Illinois New Jersey Maine Mississippi Alabama Connecticut West Virginia New Mexico Wyoming

Job Growth, 2007 – 2017

Orange Bars are Energy States

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12

  • 200,000

400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18

Bakken, Barrels of Oil Per Day

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  • 100,000

200,000 300,000 400,000 500,000 600,000 700,000 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18

Niobrara, Barrels of Oil per Day

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  • 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18

Permian Basin, Barrels of Oil Per Day

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  • 1,000,000

2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18

Niborara, Mcf of Natural Gas Per Day

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  • 2,000,000

4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18

Permian, Mcf of Natural Gas per Day

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  • 5,000,000

10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18

Appalachia, Mcf of Natural Gas per Day

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19

  • 169

46

  • 6
  • 12
  • 200
  • 150
  • 100
  • 50

50 100 2016 2017 2018 2019

Components of annual change million short tons

Western region Appalachian region Interior region

forecast

15 30 45 60 75 90 2015 2016 2017 2018 2019

monthly history monthly forecast annual average

U.S. coal production million short tons

Source: Short-Term Energy Outlook, September 2018

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20

30% 28% 28% 33% 34% 32% 34% 35% 37% 39% 39% 33% 30% 30% 28% 27%

2.5 5 7.5 10 12.5

2012 2013 2014 2015 2016 2017 2018 2019

U.S. electricity generation by fuel, all sectors million megawatthours per day

forecast

coal natural gas nuclear non-hydro renewables hydropower

  • ther

Note: Labels show percentage share of total generation provided by coal and natural gas.

Source: Short-Term Energy Outlook, September 2018

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21

  • 10.0%
  • 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% Utah North Dakota Texas Colorado Washington Idaho California Massachusetts Florida New York Oregon South Carolina Tennessee Georgia South Dakota North Carolina Montana Minnesota Nebraska Nevada Virginia Hawaii Oklahoma New Hampshire Arizona Indiana Maryland Iowa Kentucky Michigan Delaware Pennsylvania Missouri Wisconsin Arkansas Alaska Ohio Rhode Island Louisiana Kansas Vermont Illinois New Jersey Maine Mississippi Alabama Connecticut West Virginia New Mexico Wyoming

Job Growth, 2007 – 2017

Red Bars are WSATA States

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22

  • 7.0%
  • 5.0%
  • 3.0%
  • 1.0%

1.0% 3.0% 5.0% 7.0%

Alaska Wyoming Texas Washington Montana Utah Louisiana South Dakota Idaho Colorado Nebraska Oklahoma North Dakota North Carolina Alabama New Mexico South Carolina Mississippi Oregon Kansas Arkansas Massachusetts Virginia Georgia Maine Iowa Nevada Illinois Wisconsin Minnesota Missouri Pennsylvania New York Kentucky California Tennessee Maryland New Hampshire Connecticut Hawaii Indiana West Virginia New Jersey Arizona Delaware Ohio Vermont Michigan Florida Rhode Island

Job Growth, 2007

Oil: $72.41 Natural Gas: $6.97

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  • 7.0%
  • 5.0%
  • 3.0%
  • 1.0%

1.0% 3.0% 5.0% 7.0%

North Dakota Alaska Wyoming Oklahoma South Dakota Texas Louisiana West Virginia Kansas Nebraska New York Iowa Massachusetts Virginia Pennsylvania New Hampshire Colorado New Mexico Wisconsin Minnesota Washington Arkansas Montana Missouri Vermont Maryland Connecticut Maine Illinois New Jersey Utah Mississippi Kentucky Delaware North Carolina Ohio Alabama Tennessee California Indiana Rhode Island Georgia South Carolina Hawaii Idaho Oregon Michigan Arizona Florida Nevada

Job Growth, 2008

Oil: $99.75 Natural Gas: $8.86

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  • 7.0%
  • 5.0%
  • 3.0%
  • 1.0%

1.0% 3.0% 5.0% 7.0%

North Dakota Nevada Colorado Texas Florida Georgia Oregon Utah South Carolina California Washington Delaware Massachusetts Tennessee Idaho North Carolina Louisiana Arkansas Arizona Oklahoma Rhode Island Michigan New York Ohio Kentucky Wyoming New Mexico Wisconsin Indiana Illinois Missouri Maryland Alabama Minnesota Pennsylvania South Dakota Connecticut New Hampshire Kansas Iowa New Jersey Nebraska Mississippi Maine Virginia Montana Vermont Alaska Hawaii West Virginia

Job Growth, 2014

Oil: $92.91 Natural Gas: $4.37

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  • 7.0%
  • 5.0%
  • 3.0%
  • 1.0%

1.0% 3.0% 5.0% 7.0%

Utah Florida Nevada Oregon California Idaho Virginia South Carolina Washington Georgia Tennessee Hawaii Arizona Colorado North Carolina Montana Missouri Arkansas New Hampshire Delaware New York Indiana Massachusetts Maryland Minnesota Mississippi Kentucky Nebraska Illinois Wisconsin Michigan Rhode Island New Jersey Alabama Texas Ohio South Dakota Maine Iowa Pennsylvania Connecticut Vermont Kansas New Mexico Oklahoma Louisiana Alaska West Virginia Wyoming North Dakota

Job Growth, 2015

Oil: $48.79 Natural Gas: $2.62

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26

  • 7.0%
  • 5.0%
  • 3.0%
  • 1.0%

1.0% 3.0% 5.0% 7.0%

Idaho Washington Utah Florida Nevada Arizona Oregon Georgia California Colorado South Carolina North Carolina Tennessee Massachusetts New Jersey Michigan New Hampshire Texas New York Maryland Maine Minnesota Missouri Alabama Indiana Ohio Pennsylvania Wisconsin Arkansas Virginia Montana Illinois Kentucky Delaware Hawaii Vermont South Dakota Mississippi New Mexico Iowa Rhode Island Connecticut Kansas Nebraska Oklahoma Louisiana West Virginia Alaska North Dakota Wyoming

Job Growth, 2016

Oil: $43.40 Natural Gas: $2.52

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  • 7%
  • 5%
  • 3%
  • 1%

1% 3% 5% 7% Idaho Utah Nevada Washington Oregon Colorado California Arizona Texas Florida Oklahoma South Carolina North Carolina Rhode Island Montana Georgia Pennsylvania Hawaii Minnesota New York Massachusetts Michigan Tennessee South Dakota Mississippi Wyoming Missouri New Jersey New Mexico New Hampshire Indiana Alabama Iowa Illinois West Virginia Wisconsin Nebraska Ohio Kentucky Maine Virginia Kansas Arkansas Connecticut Delaware Louisiana Maryland Vermont North Dakota Alaska

Job Growth, 2017

Oil: $50.80 Natural Gas: $2.99

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  • 7.0%
  • 5.0%
  • 3.0%
  • 1.0%

1.0% 3.0% 5.0% 7.0%

Idaho Utah Texas Colorado Nevada Washington Arizona North Carolina Oregon Florida Tennessee New Hampshire Kansas Massachusetts Wyoming Georgia South Carolina Oklahoma California Mississippi New Mexico Rhode Island Hawaii South Dakota Nebraska Alabama Ohio Pennsylvania Missouri Michigan Minnesota New York Virginia Maine New Jersey Wisconsin Iowa Illinois West Virginia Connecticut Delaware Louisiana Montana Arkansas Indiana Maryland Kentucky Vermont North Dakota Alaska

Job Growth, July 2017 - July 2018

Oil: $60.57 Natural Gas: $2.87

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Jobs by Industry, WSATA States

(Seasonally Adjusted, in Thousands) Industry 2017 Jobs Trade, Transportation, and Utilities 8653.8 Government 7363.3 Education and Health Services 6698.7 Professional and Business Services 6547.5 Leisure and Hospitality 5490.5 Manufacturing 3296.6 Construction 2574.7 Financial Activities 2536.6 Other Services 1587.5 Information 1116.4 Mining and Logging 396.5

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Jobs by Industry, WSATA States

(Seasonally Adjusted, in Thousands)

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Industry 2007-2017 Change Education and Health Services 1,644.0 Leisure and Hospitality 1,063.5 Professional and Business Services 960.5 Trade, Transportation, and Utilities 645.6 Government 384.3 Other Services 155.2 Financial Activities 137.4 Information 61.5 Mining and Logging

  • 5.3

Construction

  • 82.4

Manufacturing

  • 260.1
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Jobs by Industry, WSATA States

(Seasonally Adjusted, in Thousands)

31

Industry 2007-2017 %Change Education and Health Services 32.5% Leisure and Hospitality 24.0% Professional and Business Services 17.2% Other Services 10.8% Trade, Transportation, and Utilities 8.1% Information 5.8% Financial Activities 5.7% Government 5.5% Mining and Logging

  • 1.3%

Construction

  • 3.1%

Manufacturing

  • 7.3%
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Texas Comptroller of Public Accounts

Forecast

  • Oil prices $65 - 70/bbl over next two years
  • Natural gas prices remain relatively steady, around $3/mmbtu

in same period

  • Ready supply likely to hold prices in check

32

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Texas Comptroller of Public Accounts

Conclusion

  • We expect relative stability in prices, continued rise in

production

  • But this is a volatile sector and stability has been rare over the

last twenty years

  • Uncertainty around such forecasts is relatively high

33

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20 40 60 80 100 120 2013 2014 2015 2016 2017 2018 2019

Source: Short-Term Energy Outlook, September 2018, and CME Group Note: Confidence interval derived from options market information for the five trading days ending Sep 6,

  • 2018. Intervals not calculated for months with sparse trading in near-the-money options contracts.

West Texas Intermediate (WTI) spot price

95% NYMEX futures price confidence interval upper bound STEO forecast NYMEX futures price 95% NYMEX futures price confidence interval lower bound

West Texas Intermediate (WTI) crude oil price and NYMEX confidence intervals

dollars per barrel

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  • 10.0%
  • 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% Utah North Dakota Texas Colorado Washington Idaho California Massachusetts Florida New York Oregon South Carolina Tennessee Georgia South Dakota North Carolina Montana Minnesota Nebraska Nevada Virginia Hawaii Oklahoma New Hampshire Arizona Indiana Maryland Iowa Kentucky Michigan Delaware Pennsylvania Missouri Wisconsin Arkansas Alaska Ohio Rhode Island Louisiana Kansas Vermont Illinois New Jersey Maine Mississippi Alabama Connecticut West Virginia New Mexico Wyoming

Job Growth, 2007 – 2017