Nesso Insights

Summary | U.S.Energy Outlook

  • Crude oil production for 2018 and beyond expected to surpass 1970 record of 9.6 million b/d
  • WTI crude prices expected to land between $54/b to $84/b through November (95% confidence level)

US Net Imports

  • US crude oil production expected to surpass 1970 record of 9.6 million b/d in 2018
  • Pipeline capacity constraints production in the Permian. New pipelines are being built to meet demand.

Summary | Oklahoma Economic Report

“It would appear Oklahoma’s economic engine is hitting on all cylinders,” Treasurer Ken Miller, Ph.D.

  • Beginning in April 2017, Amazon and some other online retailers began collecting and remitting use tax on directly-sold merchandise to Oklahomans.
  • Tens of millions of dollars per year expected from House Bill 1019XX, the Marketplace Sales Act, which requires businesses to collect sales tax for goods sold online. This is a big win for municipalities since they depend solely on sales and use taxes.

Online Sales Boost Use Tax Collections (% change from prior year collections)

What is Use Tax?

The Oklahoma Use Tax is a 4.5 percent levy on the purchase price of tangible personal property, including pre-paid transportation, purchased outside Oklahoma and stored, used, or otherwise consumed within the state. Oklahoma sales tax cannot be imposed on a sale which occurred in another state, but the Use Tax applies when the taxable item is brought into Oklahoma for use.

Oklahoma gross receipts

  • Gross Receipts Reach All-Time High, helped by new Use Tax
  • June marked the 15th consecutive month of positive growth in receipts

Summary | US & OK Economic Outlook

  • Oklahoma GDP is back with oil production leading the way
  • Manufacturing activity posted record highs in 2018, despite trade concerns
  • Oil and gas production is at a record high, but with considerably fewer rigs and workers than in the past

OK rig count_employment_production

Conclusion

  • The U.S. economy continues to grow despite headwinds, and the Fed raising rates.
  • Hight commodity prices are helping the Mid-Continent grow business and state budgets
  • Investment by the oil & gas industry in efficiency gains may hurt job growth in the future

Sources

U.S. Energy Information Administration. Short-Term Energy Outlook (STEO). July 2018 – https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf

Oklahoma Tax Commission, Business Use Tax, 7/10/2014 – https://www.ok.gov/tax/Businesses/Tax_Types/Business_Use_Tax/ Oklahoma Economic Report, Treasurer Ken Miller, Ph.D., Volume 8 | Issue 6 – June/July 2018 – https://www.ok.gov/treasurer/Economic_Reports/index.html Federal Reserve Bank of Kansas City – Oklahoma City Branch | Chad Wilkerson, Oklahoma City Branch Executive and Economist | U.S. and Oklahoma Economic Outlook August 3, 2018. – https://www.kansascityfed.org/~/media/files/publicat/speeches/2018/2018-wilkerson-govtfinanceofficersok-08-18.pdf

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