ELAM: Energy states fuel economy

Fossil fuel producing states helped boost the U.S. economy by 2.5% last year. The economies of Texas and New Mexico grew 5.7% and 4.1%. Oil and gas operations added 2-3% of theses states’ Gross Domestic Product growth. GDP growth in the Northeast states was a fraction of these numbers. New York state GDP was up a mere .7%. The populations of Florida and New York are about the same. But the state budget of New York is double that of Florida. No wonder there is an outflow of population from New York to lower taxing states.

The U.S. produced a record 13.3 million barrels of oil in 2023. Natural gas production surged to 45.3 trillion cubic feet. This racked up $26.3 billion in Texas royalty revenues.

President Biden likes to brag about the U.S. economic strength. It is certainly not due to his love affair with Electric Vehicles (EVs). The stock prices of all the recent EV public companies are now trading at less than $10.

Texas in particular has been able to expand production as its oil is not on federal but privately owned land. The efforts to throttle energy production have not hindered Texas as a result.

Israel launched a restrained attack on Iran Thursday night. The result was a huge daily range for crude prices. West Texas Intermediate reached a high of $86.28 and a low of $82.10. It is trading at the low number as I write at 6:16 a.m. Friday morning. The five-day change has oil down 3.86%.

I was optimistic that oil decisively broke the $80 level. But it became quickly overbought as did the shares of energy companies. We have a low due today for stocks and the market is trading off 100 DJIA points. One article suggests Wall Street does not believe in $100 oil. And it may be that plenty of inventory will tamp prices down.

The share prices of Halliburton, Apache, and DIG are now quite oversold on an hourly basis. Let’s see how they open next Monday.

Evidence that the overall stock market topped in late March continues to grow. The SPX has dropped five days in a row. Negative social mood exploded with blockages of both the Brooklyn and Golden Gate bridges this past week. Police arrested over 100 protesters at Columbia University this week. These groups have made clear on their website for their intent to disrupt the Democrat Convention in Chicago, a replay of the 1968 episode.

Expect the October 2022 low of 29,000 to be taken out, probably this year.