Sublette County in southwestern Wyoming produces more natural gas than any other county in the nation. Largely driven by production from the massive Jonah gas field, Sublette County experienced striking growth in drilling activity from roughly 2006 through 2009 while its southern neighbor Sweetwater County experienced a larger share of growth in population. While rigs still operate in the area, drilling activity and gas production has markedly slowed in recent years.
Natural gas production in Sublette and Sweetwater counties of Wyoming.
The Sweetwater County city of Rock Springs experienced the largest impact from population growth. From 2000 through 2010, the city’s population grew by almost 25 percent and increased demand for road repairs, expansion of sewer and water infrastructure, and increased policing activity drove up the city’s costs.
Because Wyoming does not allocate a large amount of oil and gas tax revenue to its cities, Rock Springs could have faced challenges funding the expansion of these services. However, voters in Sweetwater County had previously approved an additional 2 percent in sales and use taxes on top of the state’s 4 percent base rate, allowing Rock Springs and its neighbor Green River to keep up with increased costs.
Rock Springs revenue.
The town of Pinedale, ninety miles north of Rock Springs and the seat of Sublette County, has not seen the same increase in tax revenue, as voters have not approved the additional 2 percent sales and use tax. The town saw large new costs associated with population growth from expansion of sewer infrastructure, increased road maintenance costs, and the construction of a new public works building.
Because the Wyoming state government changed its allocation formula during the boom period, the town actually saw a decrease in revenues from oil and gas production taxes, even as production surged. In 2002, the city received roughly $475,000 from these taxes. In 2010, that figure was just $260,000. Like the larger city of Rock Springs, increased sales tax revenues enabled Pinedale to keep up with higher costs from population growth.
The Sublette County government has seen far greater increases in revenues. Since counties in Wyoming collect property taxes on oil and gas produced within their borders, revenues shot up during the boom years, and the county’s cash balance grew from $11 million in 2002 to nearly $150 million today. While costs for services such as road repairs have increased and the county struggled to retain parts of its workforce during the boom, natural gas development has clearly been a large benefit for county finances.
Wyoming’s economy is heavily reliant on energy production, and local governments in the region are acutely aware of how volatile commodity prices and “boom and bust” cycles can create challenges for local governments planning for the future. The natural gas boom in Sublette County seems to have generated more financial benefits for local governments than costs, though these effects are not evenly distributed between cities and counties.
Drilling rig operates in the Jonah Field in Sublette County, Wyoming.
These cycles are likely to continue in Wyoming as long as the state’s economy relies heavily on energy production. As Jeff Neiters, the finance director in Green River, said, “If there were no booms, there’d be no Wyoming.”
This research was carried out at the Duke University Energy Initiative with support from the Alfred P. Sloan Foundation.