Oil States Struggle With Low Prices

Bloomberg:

As the price of crude falls for a second year, marking the steepest decline since the recession, the impact is cascading through the finances of states, cities and counties, in ways big and small. Once flush when production boomed, some governments in major energy producing regions are facing a new era of unwelcome austerity as wells are shut -- along with the tax-revenue gushers they spouted.
Alaska, Louisiana and Oklahoma have seen tax collections diminished by the rout, which has put pressure on credit ratings and led investors to demand higher yields on some securities. In Texas, the largest producer, the state’s sales-tax revenue dropped 3 percent in November from a year earlier as the energy industry exerted a drag on the economy.
Further west, Colorado’s legislative forecasters on Dec. 21 estimated that the state’s current year budget will have a shortfall of $208 million, in part because of the impact of lower commodity prices. In North Dakota, tax collections have trailed forecasts by 9 percent so far for the 2015-2017 budget...
On Dec. 23, Moody’s Investors Service said Oklahoma may be downgraded from Aa2, the third highest rank, because of the prospect for a “prolonged, muted recovery in prices and production.” In February, S&P and Moody’s cut their outlooks on Louisiana’s rating -- which is now the third highest from both -- because of oil’s impact, which left the state with a $487 million mid-year deficit. Alaska is at risk of loosing its AAA rating from S&P, which cut its outlook on the state in August after the government’s revenue was cut by more than half.
The outlook has led investors to demand higher yields relative to other debt. A 10-year Louisiana bond traded last month for a yield of 2.64 percent, or 0.56 percentage point over top-rated debt, more than triple the gap when they were first sold a year ago. That difference on a 10-year Alaska bond has nearly doubled since August to 0.31 percentage point.

These states have been getting a free ride for a hell of a long time.  I'm not losing sleep over whether Alaska, Oklahoma or Louisiana might have to raise taxes or slash spending.  I was tired of hearing about Texas and North Dakota anyway.