Texas Comptroller Susan Combs’ office said Thursday that the state’s current 2014-2015 budget will end with a positive balance of nearly $2.6 billion.
In her report to lawmakers, the Comptroller credited the state’s booming oil and gas sector as a key reason for that budget surplus. As Combs stated:
“It should be noted that oil and natural gas exploration and production figured prominently in the state’s economic and fiscal fortunes these past few years. Oil prices have remained firm from late 2009 to the present; the number of drilling rigs operating is near an all-time high; and the Eagle Ford Shale and new Permian Basin play continue development with accompanying increases in production.”
So, oil and natural gas production does it again. With the technological advancement in horizontal drilling and hydraulic fracturing, the economy of Texas continues to grow at a rapid clip.
And what specifically did the growth of energy development yield? According to Combs:
“Fiscally, this level of activity contributed substantially to the $2.51 billion transfer to the Economic Stabilization Fund (ESF) I made late last month. Further, following voter approval last month, I have transferred $2.00 billion from the ESF to the State Water Infrastructure Fund for Texas.”
As we’ve mentioned before, the ESF is more commonly known as the Rainy Day Fund, and it is primarily funded by oil and natural gas operations. The fund is a special fund used to supplement budget shortfalls, so with this increase in funds, Texas can support critical projects like the state’s water plan, public education, and other infrastructure projects.
Combs said oil and natural gas exploration is driving the state’s fiscal fortunes, and she expects in fiscal year 2015 to make an additional $1.38 billion transfer to the Rainy Day Fund from oil and natural gas severance tax revenue. Based on her projections, that will mean a balance of about $8 billion by the end of 2015.
In addition to a projected Rainy Day Fund increase, the report stated Texas has recovered 100 percent of the jobs lost during the recession and has added 597,000 above the previous peak in August 2008. Again, oil and natural gas companies account for a significant amount of jobs in the last few years.
The announcement by the Comptroller is not surprising, as just two weeks ago Texas stunned the world by hitting its highest monthly rate on record for oil production, thanks to booming shale development. According to the U.S. Energy Information Administration, the state pumped 2.7 million barrels of crude per day during September, which marked a 30 percent jump over September 2012 and is the highest average since monthly record-keeping began in January 1981.
Records such as this allow fiscal opportunities to flourish and Texas to maintain its strong economy. The fact that this growth is also boosting public revenue – which pays for services that benefit all Texans – is just one more reason why the shale revolution is such an economic game-changer.