NCPA - National Center for Policy Analysis


May 27, 2008

Even as much of the country struggles with the housing bust and a weak economy, states that produce oil, gas and other commodities are enjoying a boom and ramping up spending on infrastructure from wind farms to education, say observers.

For example:

  • While many other states are cutting health care and education, Alaska is spending heavily on infrastructure, including a proposed $25 million toward expanding the Port of Anchorage and $25 million toward a wind-power project near Anchorage.
  • Alaska has also set aside $4 billion -- a third of its budget -- in two "rainy-day funds" for leaner times.
  • Around Fort Worth, Texas, drilling rigs are popping up on college campuses such as the University of Texas at Arlington, feeding royalties to landowners.
  • Wyoming has increased its education budget 42 percent over the past two years.

Regions that produce energy and other commodities are enjoying higher employment and faster-rising incomes:

  • In North Dakota, Montana, Wyoming, Oklahoma and Texas, personal income, which includes income from wages and investments, grew between 6.4 percent and 7.4 percent in the fourth quarter of last year from the year before, before adjusting for inflation. 
  • Meanwhile, incomes in the country as a whole grew 5.9 percent.

Most states with thriving economies didn't have a sharp run-up in housing prices and so have avoided precipitous declines.  Now, as high energy prices spur production from oil and natural-gas wells once too costly to be profitable in Texas and other states, there is strong demand for new workers.  Newcomers flocking to jobs in labor-short markets help buoy housing markets, say observers.

Source:  Conor Dougherty and Ben Casselman, "For Energy-Producing States, Prices Yield a Boom,",, May 22, 2008.


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