A lengthy recovery in the price of oil will be needed to return Wyoming’s oil production to where it was before the coronavirus pandemic, Gov. Mark Gordon said Friday.
Gordon, speaking during Town Square Media’s “Economy Town Hall” broadcast on the company’s Wyoming radio stations, said a rise in the price of oil alone will not be sufficient to sustain a recovery of the industry.
“It is going to take a serious recovery on two fronts to make that work,” he said. “One is it has to recover price to get back to where it’s economic in Wyoming to produce and then it has to stay there for some time because a lot of companies are idling their rigs. Those rigs don’t go back up with just a click of the fingers.”
Oil prices have declined significantly in recent weeks due to a decline in demand for energy with the coronavirus pandemic and an oil price war between Russia and Saudi Arabia.
At least part of the problem could be solved with the resumption of normal business activities in the country, Gordon said.
“The demand destruction has just been catastrophic,” he said. “People aren’t flying. People aren’t using electricity like they used to. We’ve got to get this country back working again.”
The state’s role will be to make sure Wyoming’s mineral industry is ready to meet that demand once things return to normal, he said.
“Today I’m going to be talking about the things we can do to try to stimulate our economy to make sure we have all the oilfield service companies, the miners … available so when our economy does rebound, which it will, that we’re ready to be right in the lead.”
The Legislature is expected to meet in special session later this year to address how to spend $1.25 billion in funds received from federal aid programs and how to adjust the budget its members approved in March to compensate for an anticipated drop in mineral revenue.
Gordon has already ordered state departments to freeze hiring and the issuing of contracts and has asked department heads to look at ways to cut their spending, although exact income cuts are not yet known.
“Unfortunately, we won’t really know the impact of this quarter for a while yet,” he said. “Probably around May 20, we will see numbers that will make our eyes pop. I think it does mean we’ve got to re-examine our budget pretty substantially.”