Wyoming’s uncertain economic future presents risks
Wyoming must be thoughtful when it comes to its future, as we are in a perilous position. The economic drivers of our state are changing, and cracks are showing in our economic foundation. We must be careful that we do not make long-term decisions based on a narrow view of our current economic conditions. Our economic future is likely to be very different from our past, and the challenges we are going to face moving forward will be different challenges from those we have dealt with before.
Wyoming’s economic future is difficult to predict. Wyoming’s tax structure, revenues, and growth potential are all on shaky ground right now, with outside factors putting our future prospects in an especially uncertain state. For example, much of our state revenue comes from oil, gas, and coal revenues. We are already aware of the long-term trend in coal production, which appears headed toward a general decline as the overall market shifts to other energy sources. What is not often talked about is the potential for disruption to our oil and gas markets.
Oil is typically the largest income producer of our state’s natural resources. For example, in 2024, severance taxes from oil were over triple what was collected from coal. Natural gas also can provide significant state revenue, but prices are extremely volatile. 2022 and 2023 were great years for natural gas, but 2024 saw severance tax revenue from natural gas fall to less than half of the previous year, and current projections show prices staying at or below last year’s levels. Both oil and natural gas prices are subject to international market forces. If, for example, the Russia-Ukraine conflict is resolved and Russian oil and gas is allowed back into western markets, there is the potential for both oil and natural gas prices to plummet, which directly harms Wyoming’s economy and state revenues. There is nothing we can do to control or impact these factors, but they have the potential to greatly harm Wyoming’s economic output and our ability to fund
our state.
The same uncertainty also applies to other industries. We are currently in an extremely volatile economic environment. Tariffs and uncertain regulatory schemes from Washington have shaken confidence in the American economy. Stock prices are the lowest they have been in years and continue to fall with each new announcement from Washington. Wyoming is not immune to the struggles of the national economy, and that economy appears to be headed downward. Do not expect new investment or growth while the current chaos continues.
To top it all off, Wyoming’s demographics are also headed in a direction that indicates coming difficulties. When comparing Wyoming’s demographic changes between the 2010 and 2020 censuses, a trend quickly emerges. Wyoming is trading its youth for retirees.
Between 2010 and 2020, Wyoming lost close to a fifth of its preschool aged children. During the same time period, our 60+ population increased by 36%. In ten years, we added over 37,500 people over the age of 60 while losing around 24,000 people under age 60. That should make every business-owner and economic forecaster stop in their tracks, because it means that our conventional wisdom about Wyoming youth leaving only to return later is wrong.
Students become young workers who begin building families. Our failure to retain our youth is trickling down into a loss of the next generation of Wyomingites. This will only compound our problems down the road and is a catastrophe for our future outlook. A lack of young workers leads to a lack of mid-career workers which leads to a lack of senior workers. Wyoming’s economy is staring down a major labor crunch that appears to be just beginning. Loss of economic activity due to the inability to find employees also risks putting our state in a difficult position. You cannot mine coal or drill for oil without employees to do the work.
This paints a gloomy picture, but it is one that we need to have at the front of our minds as we make decisions about our state’s future. We cannot assume that what has worked in the past will work tomorrow, or that we can ignore the realities of our current condition. We have challenges, and some are major. If we ignore them, we are likely to choose a path that puts us in an even worse position that we started in.