The great outdoors and the super tax-friendly policies in Wyoming are attracting a growing number of the ultra-wealthy to the Cowboy State in search of quiet scenic retreats from the COVID pandemic in U.S. metropolitan areas. While the super-rich flock to the multi-million mountain ranch refuges in the nation’s least populous state, the energy industry—which accounted for 40 percent of property taxes in the state in 2019—is going through another bust due to the oil price and demand crash in the pandemic.
Thousands of oil and gas workers have lost their jobs as oil, gas, and coal production in Wyoming have slumped this year. The state has had to revise its projections for revenues from the industry, considering that since the pandemic, oil and gas companies have operated a low single-digit number of rigs.
For one week in late June, Wyoming didn’t have any operating rigs—the first time in its history since it became a state in 1890, and the first time since the first well was drilled in 1884.
The situation with the oil industry could become even worse if Joe Biden follows through his pledge to ban new lease sales on federal lands, the Petroleum Association of Wyoming (PAW) and the American Petroleum Institute (API) warn.
Last year, Wyoming ranked eighth in crude oil and natural gas production in the U.S., according to data from the Wyoming State Geological Survey. Except for Teton and Platte counties, all other 21 counties in the state were oil and gas producers in 2019, the Petroleum Association of Wyoming says.
Taxes and royalty payments from Wyoming’s oil and natural gas producers contributed US$1.67 billion to state and local governments last year, equating to US$2,882 in direct payments for government services for every person living in Wyoming, the PAW said in its 2019 revenue analysis.
“These numbers show what most of us already know – Wyoming thrives when industry succeeds,” PAW President Pete Obermueller commented. Last year, Wyoming’s oil and gas industry employed more than 19,000 people.
This year, the oil, gas, and coal industries registered 6,000 job losses as of August compared to August 2019, or a 29.1-percent annual decline, Wyoming’s Economic Analysis Division said in its latest report.
According to Baker Hughes data, the rig count in Wyoming plunged from 25 in January to just 1 in June, and zero for one week late in that month. The rig count had increased to 3 by early October and has held that number since then.
State tax revenues from oil and gas have also slumped with the significant decline in production. Sales and use (S&U) tax collections from the mining sector saw the largest decline compared to September 2019, falling by US$9.4 million, or by 71.9 percent, Wyoming’s Economic Analysis Division noted.
Due to the downturn in Wyoming’s key oil, natural gas, and coal industry, total severance tax collections in FY 2020 were the lowest recorded in 17 years, even though the material effects from COVID-19 on energy demand influenced just the last four months of FY 2020, Wyoming State Government said in its latest Revenue Forecast last month.
While the COVID-inflicted crisis is weighing on Wyoming’s oil and gas industry with workers let go and many moving away, the state has become an attractive retreat from COVID for the super-rich as it doesn’t have a personal or corporate income tax and has one of the lowest sales tax rate in the U.S.
The ultra-rich have access to private doctors and bring their own ventilators, while Wyoming’s long-time residents are now starting to see a spike in coronavirus cases, Ben Kesslen of NBC News writes.
“We only have about five people per square mile. We have been socially distancing the entire 130 years that we have been a state,” Republican Wyoming Senator John Barrasso told Fox & Friends in April, when the state wasn’t imposing any stay-at-home orders like most other U.S. states.
The overwhelming majority of the nearly 22,500 COVID-19 cases in the state as of November 15 have been registered since October 1, according to NBC News.
Meanwhile, even before the pandemic, Teton County in northwestern Wyoming had become the most unequal place in the U.S., Justin Farrell, an associate professor of sociology at Yale University in the School of the Environment, wrote in MarketWatch in April.
“Wyoming has become a lucrative tax haven because it can afford to. Sure, it, like many western states, has a strong cultural aversion to taxation, but its ultra-wealth-friendly tax policies also have been made possible by record windfalls from oil, gas, and coal,” Farrell said.
By Tsvetana Paraskova for Oilprice.com