Gov. Frank Keating on Wednesday appointed an emergency team to
consider what can be done to protect the state and the thousands of
Oklahoma oil producers from the impact of the continuing decline in
The team, to be headed by Oklahoma Corporation Commissioner
Bode and Mike Smith, state energy secretary, has been asked to look
at the cost side of the oil-producing ledger to see what steps can
taken to give producers some fiscal breathing room. The governor
mentioned utility costs -- a key concern for smaller producers --
tax policy as two issues due for review.
"We know there is nothing we can do about the price of oil," said
Keating. "What we can do is provide whatever relief possible to
lessen the impact on Oklahoma's producers."
The panel will also include producers, royalty owners and others
involved in the oil and gas industry. It has a 30-day time line to
produce an action plan.
Utilities that serve oil and gas companies and the Interstate Oil
and Gas Compact Commission have also been asked to participate.
Recently, spot oil prices have plummeted to about $12 per barrel,
which officials say is about break-even level for the 70,000
wells in Oklahoma. These wells represent a vast majority of Oklahoma
wells and create jobs for about 50,000 state residents.
"We need a regulatory policy to keep these wells alive," Keating
Without some assistance, Keating said, the price reduction could
prove a crippling blow to the wells that make up most of Oklahoma's
"There are immediate steps that can and will be taken and I want
this team to look at other options to give these producers a safety
net as the oil prices plummet," the governor said.
Oklahoma's annual gross production tax revenues decline by about
$5.6 million for each drop of $1 per barrel in oil prices. Oil and
gas taxes represent about 8 percent of state revenues.
"It's not just an energy issue but an issue crucial to Oklahoma's
economy," Keating said.
The state must take steps to address the impact of dropping
prices, he added.
"It appears the low prices are a trend and we need to get an early
jump on the problem," the governor said.
However, Keating said he believes the price fluctuations are
temporary and do not signal a need to revamp his state budget
proposal, which includes several tax reduction measures.
Although gross production tax revenues are down about 18 percent
from last year, other revenues are up, finance officials point out,
producing thus far a cushion of about $40 million additional dollars
above 1997. …