FOSTER CITY, Calif., Jan. 12, 2015 (GLOBE NEWSWIRE) -- Most Americans may be relieved to see today's relatively low oil prices, but that relief can come at a steep cost to the U.S. states that rely on oil production to help power their economies, according to a new study by MoneyRates.com.
The study, which examined states' rates of oil production and consumption as well as how much of its workforce is employed in the production of oil, finds that North Dakota is the state that is suffering worst from the recent decline in oil prices.
Richard Barrington, CFA, senior financial analyst for MoneyRates.com and author of the study, says that while oil production has been a significant asset to North Dakota's economy in recent years, the drop in oil prices could slow its future growth.
"North Dakota has been a real bright spot economically in recent years," says Barrington. "For example, it has the lowest unemployment rate of any state. However, that boom has largely been a function of higher oil production. As this study shows, that makes its economy especially vulnerable to lower oil prices."
At 4.61 percent, the percentage of oil workers in North Dakota's workforce is the second highest in the nation, and the state produces more than eight times the amount of oil that it consumes. That's a bad combination in the context of lower oil prices, says Barrington. According to the study's calculations, falling oil prices have cost North Dakota more than $11 billion dollars in 2014 – or roughly $16,000 per resident.
While oil-rich states such as Alaska and Texas also made the list of the 10 states hit hardest by falling oil prices, other, less predictable states such as New Mexico, Kansas and Utah also made this list. Here are the full rankings:
1. North Dakota
5. New Mexico
Barrington says that while housing robust oil production is generally good for a state, falling oil prices can put a significant damper on these states' economic performance while boosting the economies of states that produce little or no oil — particularly those that also consume a lot of it.
"Ordinarily, having little or no oil production and high per-capita consumption would be bad things," says Barrington. "In the context of falling oil prices though, suddenly those attributes determine who the biggest beneficiaries are."
For more details on the study, please see http://www.money-rates.com/research-center/states-hurt-falling-oil-prices.htm.
This study ranked the states based on an analysis of their production and consumption of oil, as well as the percentage of oil workers employed in each state's workforce.
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