Schork Oil Outlook: Deepwater Drilling Key to Economic Recovery
Yesterday, the U.S. Bureau of Labor Statistics reported that twenty-four states recorded unemployment rate increases from a year earlier. Once again Nevada reported the highest unemployment rate among the states, 14.2 percent in June. The rate in Nevada also set a new series high. The state also recorded the largest jobless rate increase from June 2009 (+2.3 percentage points).
Now consider the situation in Nevada, whose main source of revenue is predicated upon gambling, to the situation in Louisiana, whose main income sources are commercial fishing and oil/gas extraction. Whereas unemployment in Nevada has been surging through these difficult economic times, the jobless rate in Louisiana has been moving in the opposite direction. For example, over the last twelve months unemployment in Nevada has exceeded the national rate by 3.39 percentage points on average. On the other hand, unemployment in Louisiana has come in below the national rate by 2.62 points.
Keep in mind, whereas dealers in Sin City — whose primary occupational description is to separate people from their savings, i.e., they leach the productive side of society — live off of the minimum wage and tips, whereas workers in the Louisiana oil and gas industries earn considerably more and therefore contribute considerably more to the U.S. Treasury. In other words, they contribute (handsomely) to the advancement of our society.
The U.S. oil and gas industry employs over 160,000 Americans. As of the first quarter the average weekly earnings of an employee in this industry was $1,403 or nearly twice the average, $765, for all employees in the U.S. A lot of this revenue is earned (and spent) in the Gulf Coast states.
Today’s issue of The Schork Reporthighlights the significance of this predicament: In April the U.S. government ran a rare monthly budget deficit as individual income tax receipts plunged 24% from a year ago. Thus, with every level of government in dire financial straits it is imperative to not only stimulate job growth in Nevada, Michigan, California et al, but to also preserve industries (think deepwater drilling ban) in states that have thus far carried the load through this recession.
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Stephen Schork is the Editor of The Schork Reportand has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.