A Renewable Mirage: Oklahoma's Risky Bet on Wind
Oklahoma's budget, like many resource-rich states, walks a tightrope. It leans heavily on the oil and gas industry, specifically the Gross Production Tax (GPT). In fiscal year 2023, GPT revenue hit $1.81 billion, a hefty 12.5% of all state-collected taxes. Sounds good, right? But scratch the surface, and the picture gets murkier.
Seventy-three percent of that GPT cash goes to the state's general fund, with education getting a big chunk. But here's the rub: the state's reliance on oil and gas is likely *understated*. Other taxes – income, sales, corporate – also get a boost from the energy sector, though the exact amount is, conveniently, "not publicly available." Which always makes me suspicious.
Oklahoma, unlike some of its peers (Alaska, New Mexico, Wyoming), doesn't have a permanent fund to cushion the blow when oil prices tank. They have short-term buffers, sure, but those are band-aids on a much bigger problem.
Green Dreams, Empty Coffers?
The Wind Energy Gamble Two policy decisions stand out as particularly… shortsighted. First, the GPT rate was slashed, dropping from 7% in 2011 to a measly 3% by 2016. My back-of-the-envelope calculation puts the revenue loss in the *hundreds of millions* annually. The second is a tax credit for zero-emission energy, mainly wind. Now, wind energy accounts for 42% of the state's electricity (impressive!), but it's come at a steep cost: $347 million in tax expenditures between 2007 and 2024. And here's where I start to get concerned. These revenue hits led to dramatic cuts in education spending in the mid-2010s. School districts went to four-day weeks, and teachers walked out in protest. I've seen this pattern before: prioritize short-term gains (lower taxes, green energy PR) over long-term stability. It's a classic case of robbing Peter to pay Paul, and Peter is the future of Oklahoma's kids. Tribal nations are also in the mix. The Osage Nation, for example, distributes "headrights" revenues from oil production. In 2022, that was roughly $58 million. But here's the kicker: tribes have to enact their *own* severance tax to directly benefit from production on their land. The existing state taxes? They don't see a dime. It's a double taxation issue that discourages investment. Is it any wonder that some tribes are hesitant to embrace further oil and gas development? At the local level, counties and municipalities get property and sales taxes from oil and gas. In Kingfisher County, it's a significant 30% of property tax revenue. Oklahoma County? Much lower, but that doesn't factor in office buildings and other infrastructure tied to the industry. The schools and county governments depend on this money.Oklahoma's Green Energy Gamble: Short-Term Gains?
The Real Cost of "Green" Oklahoma's green energy push isn't inherently bad. Diversifying the energy portfolio is a smart move. But the way they've gone about it raises serious questions. Subsidizing wind energy while simultaneously slashing the GPT seems like a shell game. Are they actually *gaining* revenue, or just shifting the burden? The data isn't clear. What happens when the wind farms reach their end-of-life, and the state is left with fields of obsolete turbines and a depleted tax base? Constraining the Choice Set: Oklahoma’s Limited Approach to Building Economic Resilience provides further insight into Oklahoma's approach to building economic resilience. And this is the part of the report that I find genuinely puzzling. The state's strategy feels… incomplete. There's no clear plan for replacing the lost oil and gas revenue. No long-term vision for a post-fossil fuel economy. Just a series of short-sighted decisions that prioritize immediate political wins over sustainable growth. Is Oklahoma simply hoping that wind energy will magically fill the gap? Or are they banking on another oil boom to bail them out? Short-Sighted Savings, Long-Term Pain Oklahoma's approach to economic resilience is, frankly, alarming. They're betting the house on wind energy without a safety net. They're cutting taxes without a replacement plan. They're relying on an industry that's inherently volatile. It's a recipe for disaster. And when the next downturn hits, I suspect Oklahoma will be singing a very different tune.