Constraining the Choice Set: Oklahoma’s Limited Approach to Building Economic Resilience

This report is the third in a series that explores the strategies US oil- and gas-producing regions may pursue in building economic resilience—defined as the capacity to recover from negative economic shocks (Martin 2012)—to a changing energy landscape. Recent decades have seen dramatic changes in domestic oil and gas production that have produced a complex mix of local economic benefits, environmental and health damages, and long-term economic risks. Although international, federal, and state policymakers have developed strategies to support coal communities through an energy transition, oil- and gas-producing regions have received considerably less attention. This report, focused on the state of Oklahoma and its capital, Oklahoma City, is part of a larger effort to assess local priorities for economic resilience to inform policy development at the state and federal levels.

In October 2024, we conducted semi-structured interviews with a range of local stakeholders during a 3-day research trip to Oklahoma City. We asked interviewees to describe their views on Oklahoma’s approach to building economic resilience and diversification, existing state or federal policies that advance those efforts, and what changes they would make to programs to improve the efficacy of existing policies. We also asked interviewees what barriers stood in the way of advancing their goals for economic development.

Our interviews produced six main findings:

1. Oklahoma is heavily dependent on the oil and gas industry but is not making major efforts to build economic resilience. This issue is particularly acute for the fiscal health of rural oil- and gas-producing communities and the State as a whole.
2. Oklahoma City, on the other hand, has made considerable progress in diversifying its economy by attracting new industries and enhancing local public services and quality of life through a city tax initiative. The oil and gas industry remains an important part of the local economy, but is no longer the dominant economic force, reducing the city’s exposure to an energy transition.
3. Poor education and healthcare services may impede economic diversification. Oklahoma persistently ranks near the bottom of US states for a range of outcomes relating to these issues, which deters employers. However, Oklahoma’s vocational programs are seen as a success in training workers for existing industries, including oil and gas.
4. Politically divisive issues, including abortion and LGBTQA+ rights, may deter certain investments in Oklahoma. In recent years, certain social policies and rhetoric from state elected officials have complicated efforts to attract major investments and may push some residents to leave the state.
5. Tribal nations within Oklahoma are seeking to take advantage of federal funding opportunities but continue to face challenges related to sovereignty and governmental capacity. Some Tribal governments generate substantial revenues from oil and gas production and are seeking to increase those revenues, which could further expose these communities to future fiscal shocks.
6. Oklahoma’s state and local governments have had limited success accessing federal funds. Interviewees noted a combination of capacity limitations and a lack of desire among some political leaders to pursue certain federal funding opportunities as major contributors.

These takeaways lead us to the following conclusions:

1. A long-term reduction in global oil and gas demand poses major economic and fiscal risks for the state of Oklahoma, rural oil- and gas-producing communities, and some Tribal nations within the state. Oklahoma City is less exposed because of its successful diversification efforts.
2. Not all fossil fuel-dependent states and tribes are pursuing, or are likely to pursue, strategies to build economic resilience. This suggests that direct federal efforts may be needed to support affected communities in a world where global demand for hydrocarbons declines.
3. Providing quality public services and amenities is crucial to attracting and retaining businesses and workers. Failure to do so will make it more difficult to develop a diverse and robust economy.
4. Non-economic policy issues, such as abortion and LGBTQA+ rights, can have substantial economic effects. A strong focus on these social policies can exacerbate the “big sort,” a nationwide trend of communities becoming more politically homogeneous, thereby deterring workers (and the businesses that employ them) with different political views.
5. Capacity-building efforts are essential for local governments, Tribal nations, and states to take advantage of available federal funding opportunities. Public capacity is typically overwhelmed with “immediate demands,” making it difficult to develop long-term plans for economic resilience.

Oil has played a central role in Oklahoma’s history. Use of its hydrocarbons began, like in other regions across the western US, with the tapping of oil seeps by Native Americans for medicinal purposes, followed by the diffusion of this information by US Indian In this document, we use the term “Indian” when referring to contemporaneous federal government staff, policies, or laws. Elsewhere, we use the term “Native Americans” or, where appropriate, specific tribes or nations. Agents (Franks 2010). Commercial oil exploration began in present-day Oklahoma before the Indian Appropriations Act of 1889 opened the “Unassigned Lands,” a central portion of Indian Territory, to white settlement. From 1870 to the late 1890s, prospectors drilled wells in the Cherokee, Creek, and Choctaw Nations, but they proved to be unprofitable given the lack of transportation infrastructure and, in some cases, the lack of a valid lease agreement with tribes (Franks 2010).

The state’s oil Industry began to grow rapidly after a major discovery near Bartlesville, just east of the present-day Osage Nation. The discovery motivated the Santa Fe railroad to extend a line to ship oil from the region to broader markets, reducing transportation costs and thus boosting the industry (Wilson 2010a). In 1898, the year after this discovery, Congress passed the Curtis Act, which dramatically weakened tribal governments, established a process that (coupled with the Dawes Act of 1887) led to the allotment and diminishment of tribal land holdings, and took other actions to weaken tribal authority throughout the state (Tatro 2010). The town of Bartlesville itself was established under the authority of the Curtis Act, serving as the epicenter of Oklahoma’s first oil boom (Bartlesville Examiner-Enterprise 2016).

By 1905, Oklahoma’s oil production had grown to surpass all other US states (it was passed by California in 1923, and later by Texas and other states) (American Petroleum Institute 1984). Most of this production occurred in Northeastern Oklahoma, on Cherokee and Osage lands, from the Bartlesville-Dewey oil field. In 1907, following a long period of proposals, negotiations, and advocacy between the federal government, local white leaders, and Tribal nations, Congress reorganized the entire territory into the state of Oklahoma, reflecting the uneven balance of power between the parties (Wilson 2010b). This action paved the way for further white expansion and terminated the “Indian Territory,” land that had been set aside for numerous tribes that had already been displaced to Oklahoma as a result of the US’ Indian Removal policy (Boyd 2002b). For additional detail on early oil development in the state, see the Appendix.

1.1. Twentieth Century Oil and Gas Development

Through the first several decades of the twentieth century, Oklahoma oil production grew rapidly, rising from less than 50,000 barrels per day (b/d) in the early 1900s to more than 700,000 b/d by 1925 (Boyd 2002b), then declining until World War II dramatically boosted demand. During the wartime period, as energy demand grew nationwide, natural gas began to play a larger role in the US energy mix, incentivizing producers in Oklahoma and elsewhere to capture and market their natural gas (Boyd 2002a). In the following decades, Oklahoma continued to be a major producer of both oil and natural gas.

From the 1940s to the late 1960s, natural gas production grew by more than fivefold, while oil production nearly doubled (Boyd 2002a; 2002b). Economic expansion during and after World War II had a profound impact on Oklahoma’s economy, not only due to increased demand for its oil and gas, but also the siting of numerous military installations that boosted population and seeded new industries to supply military facilities (Oklahoma Historical Society 2024a).

By the 1970s, however, oil production began a long-term decline despite continued cycles of “booms and busts,” including a burst in activity in the late 1970s and early 1980s (Figure 3) due to high energy prices (Boyd 2002b). Natural gas production, however, continued to grow until roughly 1990. As we discuss in more detail in Section 1.2, production growth resumed in the 2000s with the shale revolution, as horizontal drilling combined with hydraulic fracturing dramatically boosted well productivity.

In the mid- to late-1980’s, as global oil and domestic natural gas prices dropped and remained relatively low, the industry’s struggles reverberated through Oklahoma’s economy, and even had national economic consequences. During the boom of the late 1970s and early 1980s, Oklahoma’s Penn Square Bank dramatically expanded its balance sheet by making a large number of poorly underwritten loans to small oil and gas companies, then reselling those loans to banks across the country (Singer 2004 p. 20). When oil prices declined and the value of the underlying assets plunged, Penn Square bank failed and triggered a contagion, contributing to the ongoing Savings and Loans Crisis that was rippling through the American economy (Strunk and Case 1988). The bailout for the Continental Illinois National Bank, one of Penn Square’s largest clients, cost the public over a billion dollars and was, at the time, the largest US bank “bailout” in American history (Singer 2004, p. 6). In fact, the term “Too Big to Fail,” which became widely-used in the wake of the 2008-2009 financial crisis, was coined in reference to Continental Illinois (Nurisso and Prescott 2017).

1.2. The Shale Revolution in Oklahoma

After decades of federal government support and industry experimentation, developers in parts of Texas, Oklahoma, and elsewhere, began the widespread application of hydraulic fracturing and horizontal drilling technologies to shale resources, triggering what would become known as the shale revolution (Raimi 2018). From 2004 to 2008, the number of wells drilled in Oklahoma’s Woodford shale grew from just 24 to 750 (Vulgamore et al 2008), and some of the US’ earliest large-scale shale developers, such as Continental, Chesapeake, and Devon, were based in Oklahoma City. Over the next two decades, these technologies became dominant across Oklahoma and the nation, pushing US oil and gas production to all-time highs. Figure 3 demonstrates the transformative impact of the shale revolution on the state’s oil and gas production over roughly the last 25 years, with oil production more than doubling and natural gas production rising by roughly 75 percent.

The shale revolution has produced significant, if volatile, economic benefits for the state of Oklahoma. The share of state household income from the mining sector (most of which represents oil and gas) grew from three percent in the early 2000s to 8.6 percent in 2022, ranging from roughly 20 percent in 2008 to five percent in 2016 (RegionTrack 2023). Oil and gas employment rose substantially across the state in the early years of the shale revolution, growing from roughly 30,000 in the 1990s and early 2000s to more than 60,000 by 2015, with several “boom and bust” cycles during that period (BLS 2024). For the last several decades, and particularly since 2015, oil and gas companies have dramatically reduced the labor intensity of their operations, with direct industry employment in 2023 reaching lows not seen since the pre-shale era (RegionTrack 2023) despite strong oil and gas production. Figure 4 shows how oil and gas employment per unit of production has declined dramatically in Oklahoma (as it has nationwide).

Beyond jobs and wages, oil and gas development benefits private landowners through royalties paid on resources extracted from their estates (mineral and surface owners may be different, and benefits primarily flow to mineral owners). One recent report estimates that royalty payments grew from an average $1.5 billion per year during 1990–2000 to $3.8 billion per year from 2010–2020, with roughly 70 percent flowing to Oklahoma residents (RegionTrack 2022). These figures are updated from RegionTrack (2022, Figure 14) to 2023 dollars. The state government and many counties have also experienced increased revenues from severance and property taxes, which we discuss in more detail in Section 1.3.

Along with these volatile benefits, some counties and municipalities have faced large new infrastructure costs due to growth in the oil and gas industry, primarily related to heavy truck traffic on rural roads (Raimi and Newell 2016). The boom also exacerbated certain challenges, including environmental harms caused by pollution, and it generated new challenges, particularly the rise of human-caused earthquakes, which were primarily the result of wastewater disposal (and not hydraulic fracturing directly), a byproduct of oil and gas production. Hydraulic fracturing involves pumping large volumes of water, mixed with sand and chemicals, into a well to fracture impermeable rocks and increase production of oil and gas. Much of this water, typically called “flowback,” returns to the surface. In addition, all oil and gas wells produce water, known as “produced water,” that occurs naturally alongside the underground oil and gas. Both types of water must be carefully managed and are often disposed of deep underground. Because large volumes of wastewater were being injected into unstable subsurface zones, the state experienced thousands of earthquakes during the 2010s, with some quakes causing substantial damage at the surface before state regulators intervened to reduce the number and severity of these quakes (USGS 2024).

1.3. Oil and Gas Revenues

Oklahoma depends considerably on oil and gas revenues to support public services at the state and local level (data on tribal revenue are generally not publicly available). One leading source is the state’s Gross Production Tax (GPT), a tax applied to the value of oil and natural gas produced in the state. In FY 2023, Oklahoma collected $1.81 billion from the GPT, 12.5 percent of all state-collected taxes. 73 percent of these revenues went directly to the state’s general and revenue stabilization fund, 16 percent directly to education, and 11 percent to transport and water infrastructure (Oklahoma Tax Commission 2023a). In practice, around 50 percent of GPT revenues flow to the state’s education system, as education spending is a large component of general fund expenditures (RegionTrack 2023).

These statistics may severely understate the state’s reliance on the oil and gas industry. Other major state revenue sources, such as personal income taxes, sales taxes, and corporate income taxes, are also supported by the oil and gas industry, although detailed data on their contribution is not publicly available. Unlike some other US states (e.g., Alaska, New Mexico, Wyoming), Oklahoma does not invest oil and gas revenues into a permanent fund that is designed to support public services in the event of a long-term downturn in oil and gas revenues (Newell and Raimi 2018), although it does support two funds that provide short-term fiscal buffers: the revenue stabilization fund and the “rainy day” fund (Oklahoma Legislative Office of Fiscal Transparency 2024).

Two energy tax policies are worth noting because they have created challenges for the state budget, which must be balanced each year. The first was a reduction to the GPT rate in 2010, which lowered the effective rate from 7 percent of oil and gas production value in 2011 to 3 percent in 2016, Authors’ calculations based on GPT revenue data provided the Oklahoma State Tax Commission (2023a) and the value of statewide oil and gas production calculated using production volumes and prices from the US EIA. reducing annual revenues by hundreds of millions of dollars per year. The second is a tax credit to zero-emissions energy producers for most of the last two decades, helping wind energy grow to 42 percent of statewide electricity production by 2023, but resulting in $347 million in tax expenditures from 2007 to 2024 (US EIA 2023; Oklahoma Tax Commission 2023b).

Partly as a result of these foregone revenues, Oklahoma enacted dramatic cuts in education spending in the mid-2010s as state officials reduced transfers to school districts. This caused some school districts to reduce their school weeks from five to four day-weeks and contributed to a walkout of teachers protesting funding cuts, low pay, and other concerns (Oklahoma Department of Health 2017; Oklahoma Historical Society 2024b).

Some Oklahoma tribes are also heavily dependent on oil and gas extraction for royalty income and tax revenue, although there is wide variation in the role that natural resources play in tribal economies. Although data on these revenues are generally not publicly available, one example is illustrative: the Osage nation, where oil production has occurred for over a century, has a population of roughly 25,000 and disbursed “headrights” revenues An Osage headright is a property right that entitles its owner to a quarterly payment from the produced resources of the Osage Mineral Estate, the oil, gas and other sub-surface minerals under the Osage Reservation. In 1907, 2,229 headrights, one of each member for the Osage Nation, were created to disburse royalties (The Osage Nation, n.d.). of roughly $58 million dollars in 2022 (however, not all Osage members hold headrights, and 25 percent of revenues are collected by non-Osages) (Osage Minerals Council, n.d.). One issue that can deter oil and gas investment on reservation lands is that tribal authorities must enact an additional severance tax to directly collect revenue from production, which would be additional to local property taxes and state production taxes, which do not flow to tribal governments even when production occurs on tribal land (Srikrishnan, Duty, and Estus 2022).

At the local level, Oklahoma counties and municipalities collect revenues paid by oil and gas companies in the form of property and sales taxes, as well as payments from leases on land owned by local governments (Raimi and Newell 2016). For example, in Kingfisher County, which sits northwest of Oklahoma City and is one of the state’s leading oil- and gas-producers, roughly 30 percent of property tax revenue was from oil and gas infrastructure in 2022 (Oklahoma Tax Commission 2022). In Oklahoma County, one of four counties overlapping with Oklahoma City, the share of revenue from oil and gas infrastructure is much lower. However, this figure would be considerably higher if it accounted for property (e.g., office buildings) owned or leased by oil and gas companies and their supply chains. Like many other states, the main recipients of property tax revenues are school districts and county governments.

1.4. State Economic Conditions

Although the state remains heavily dependent on the oil and gas industry, central Oklahoma—particularly the Oklahoma City region—is more economically diverse than many other oil and gas producing regions in the United States. The region has a substantial military and aerospace industry dating back to federal defense investments made during World War II (Agnew 2010), a vibrant hospitality sector (PlanOKC 2024), along with growing economic strength in biotechnology, advanced manufacturing, and other sectors (Oklahoma City Chamber of Commerce 2025). Oklahoma City has also enhanced local amenities and public services by enacting and repeatedly extending the Metropolitan Area Projects Plan (MAPS), a local voter-approved 1 percent sales tax that began in 1993 and which provides funds for new or enhanced amenities such as a baseball stadium, convention center, whitewater rafting, senior centers, and more (City of Oklahoma City 2024).

The oil and gas sector’s direct contribution to state GDP has fallen from 21 percent in 2014 to 13 percent in 2023 (US Bureau of Economic Analysis, n.d.), with additional contributions that are difficult to reliably quantify. GDP data includes oil and gas extraction (North American Industrial Classification Code (NAICS) 211), support activities for mining (NAICS 213), petroleum and coal products manufacturing (NAICS 324), and pipeline transportation (NAICS 486). The defense industry directly contributed three percent of the state economic product in 2023 (US DoD 2023), with additional economic benefits through supply chains, contractors, and their spending. Oklahoma hosts eight military bases or other installations, and Oklahoma politicians have fought—mostly successfully—to protect them from closures under multiple rounds of Base Realignment and Closure (Trope 2003; Assistant Secretary of the Air Force, n.d.). In 2022, the defense and aerospace industries employed roughly 3.4 percent of Oklahoma’s labor force (US DoD 2023; US Census 2022), compared with 1.9 percent directly employed in the oil and gas industry (many more jobs are indirectly dependent on both industries) (US Census 2022). To calculate the employment share of the oil and gas industry, we used the US Census County Business Patterns data with NAICS codes: crude petroleum and natural gas extraction (NAICS 211120, 211130); drilling and support activities (NAICS 213111, 213112); natural gas distribution (NAICS 221210); oil and gas pipeline construction (NAICS 237120); petroleum refining (NAICS 324110); other petroleum and coal products manufacturing (NAICS 324199); pipeline transportation of crude oil, natural gas, and refined petroleum products (NAICS 486110, 486210, 486910); petroleum bulk stations and terminals (NAICS 424710); petroleum wholesale activities (NAICS 424720); and other pipeline transportation activities (NAICS 486990). As we discuss more in Section 3, local economic development practitioners view the aerospace industry as one promising area for future growth (PlanOKC 2024).

Oklahoma’s GDP has grown at a similar rate to the US over roughly the last 25 years, but with considerably variation that is strongly correlated with oil prices. For example, the state economy grew faster than the US during the early 2010s, when oil prices were high, but underperformed the national average in the following years as oil prices declined. In 2016, when oil prices dipped below $55/bbl, the state economy shrank by 1.9 percent while the US grew by 1.8 percent (Figure 5).

Tribal nations also contribute substantially to Oklahoma’s economy, collectively accounting for an estimated 8 percent of state GDP This estimation is obtained through dividing the tribal economic output figure in 2019 from Dean (2022) with the total state GDP as calculated by the US Bureau of Economic Analysis for that same year. and more than 54,000 jobs in tribal government and tribally-owned businesses (e.g., casinos) as of 2019 (Dean 2022). Only the Department of Defense employed more people in that year (OK Department of Commerce 2019).

In part because of the prevalence of the military, aerospace, and oil and gas industries, Oklahoma’s workforce is relatively concentrated in skilled trades. In 2022, 28 percent of the state’s state higher education enrollment was in 2-year programs, compared to 24 percent nationally (Oklahoma State Regents for Higher Education 2024; National Student Clearinghouse Research Center 2024). However, teacher turnover has been a “crisis” for the state’s primary education system, with 14 percent of teachers leaving the profession in 2024 despite substantial pay increases (Palmer 2024). These departures follow other major challenges that teachers have faced (Section 1.3).

Oklahoma persistently ranks in the bottom five of US states for educational outcomes according to a range of metrics and sources, though these measures do not incorporate postsecondary vocational education (FRED, n.d.; McCann 2024; US News and World Report 2024). Educational outcomes also vary across racial and ethnic groups, with Native American, Hispanic, and Black students generally earning lower standardized test scores than their White and Asian/Pacific Islander counterparts (Martinez-Keel 2019).

Statewide, median household income is $62,000 per year, compared with $78,000 nationally. However, Oklahoma has one of the lowest costs of living in the US (US Census Bureau 2023; C2ER 2024), with rental costs and home prices 27 percent and 44 percent lower than the national average in 2023 (US Census Bureau 2023; Redfin, n.d.). In recent years, the state has had a lower unemployment rate than the national average, hovering near 3.5 percent during 2024, compared with 4 percent nationally (US Bureau of Labor Statistics, n.d.). According to the US Census’ standard measure of poverty, Oklahoma’s poverty rate in 2022 was among the highest in the nation. However, when adjusting for cost of living, government transfers, and other factors not accounted for in the Census’ standard measure, the state’s poverty rate is near the national average (Shrider and Creamer 2023).

1.5. Federal Spending

Like other states, Oklahoma’s economy has also seen new federal spending, aimed in part at encouraging the nation’s energy system to shift away from fossil fuels, following the passage of the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA). In total, IIJA and IRA have resulted in $3.8 billion in announced (though not necessarily allocated) federal funding across Oklahoma, with 75 percent directed towards transportation infrastructure, followed by broadband and clean water investment at roughly 7 percent each, and lesser sums invested in ecological resilience, clean energy manufacturing, as well as environmental remediation (White House 2024). From the passage of the IRA through mid-2024, roughly $3.6 billion in private sector clean energy and manufacturing investment has been announced in the state, mostly related to critical minerals development and, to a lesser extent, solar power generation (Rhodium Group and MIT CEEPR 2024).

Other federal programs have supported more targeted energy and emissions-reductions projects. For example, the state Department of Transportation received federal Carbon Reduction Program funds of $106 million for projects relating to mobility emissions mitigation, $66.3 million IIJA for electric vehicle infrastructure, and $8 million from the IIJA for traffic congestion mitigation and air quality programs. The state Department of Commerce also received $6.6 million from the IIJA’s State Energy Program to implement a variety of efforts, including a state apprenticeship program, support for local government planning, and workforce development programs (Oklahoma DEQ 2024).

In October 2024, we conducted 5 semi-structured interviews with 12 individuals who worked in local, state, and tribal governments, environmental and community benefits consulting, local economic development, and workforce development. All interviews took place at the University of Central Oklahoma’s downtown campus at Santa Fe Plaza, not at individuals’ workplaces (see Appendix for full list).

We explained that stakeholders’ responses would be used to help policymakers and agency staff (particularly at the federal level) understand the priorities of the region and would be part of a broader effort to identify common and regionally specific issues among US oil and gas producing regions across the United States. The interviews ranged from 60 to 90 minutes. We did not record these conversations, as we felt that doing so would discourage interviewees from speaking freely. We did, however, take hand-written and electronic notes that were securely stored following each interview. All interviewees provided verbal consent that their responses could be used in this report.

As described in Raimi & Whitlock (2023; 2024), we framed interview questions with a sensitivity to the political salience of climate and energy issues. For example, we generally avoided terms such as “just transition,” “energy transition,” or “climate policy,” and attempted to center the concept of “economic resilience” against future oil and gas industry volatility or long-term decline, regardless of their potential causes.

By “economic resilience”, we refer to the capacity for local and regional economies to recover from negative economic shocks (Martin 2012). This includes the ability of communities to prepare in advance for shocks that may be reasonably anticipated, such as global efforts to reduce greenhouse gas emissions that would reduce demand for oil and natural gas. Strategies to build economic resilience include carrying out comprehensive planning to develop a vision for a local and regional economic future, proactive efforts to diversify the industrial base, cultivating a workforce with the skills needed to participate in growing economic sectors, and more (US Economic Development Administration 2025).

For each interview, we asked the following questions:

1. How important is the oil and gas industry for the local and regional economy?
2. How, if at all, are policymakers and others seeking to build local economic resilience?
3. What are some barriers that stand in the way of building local economic resilience?
4. How, if at all, has recent federal policy, such as the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, or the Inflation Reduction Act, affected the local or regional economy?
5. What policy changes at the federal level would you like to see to enable greater economic resilience?
6. Are local stakeholders able to access federal resources for projects that strengthen the regional economy?
7. Are there any other issues related to building local economic resilience that you think are important and that we have not asked about?

This section summarizes our key findings from our interviews and analysis. In some cases, we note recurring themes raised by our interviewees even if they may be disputed by other officials at the state or federal level. We do so because they reflect the perceptions of key stakeholders, which may differ from other perspectives. Where relevant, we also offer our own observations in reaction to the key themes identified during interviews.

3.1. Oklahoma is heavily dependent on the oil and gas industry but is not making major efforts to build economic resilience.

In many ways, the state of Oklahoma was built on the oil and gas industry. Our interviewees viewed the industry as central to the state economy, and—for the most part—did not expect that to change. Interviewees recognized the economic challenges created by industry booms and busts, and were generally supportive of efforts to mitigate that type of volatility.

However, they were mostly skeptical that a prolonged downturn in national or global oil and gas demand would occur, and explained that the state did not have a strategy to address this possibility. This view is consistent with statements from academic and industry leaders within Oklahoma, who have argued that oil and gas are “here to stay” (McNutt 2021). Unlike some other states (e.g., Colorado, New Mexico, Wyoming), Oklahoma has neither established an office to support energy communities and workers who may be affected by long-term changes in the energy system, nor has it established a permanent fund to help support public finances in the event of a long-term decline in oil and gas revenues (Clarke et al. 2024).

As noted in Section 2.3, the Oklahoma City region, where our interviews took place, has built a more diverse regional economy, although the oil and gas industry remains substantial. For decades, the city has worked to attract new industries and continues to seek out non-energy investment in sectors such as biotechnology, aerospace, and advanced manufacturing (Oklahoma City Chamber of Commerce 2025). Oklahoma City’s MAPS program has provided substantial quality of life benefits for residents and offers an example of a city willing to “invest in itself” to improve local amenities and public services. Our interviewees believed that MAPS has helped attract and retain employers and residents but noted that this type of public investment is largely absent elsewhere in Oklahoma (we discuss this issue more in Section 3.2).

Other energy technologies, particularly wind, have made substantial inroads in the state’s energy mix. However, the wind industry’s economic contributions have been more limited. Although wind generated 42 percent of the state’s electricity in 2023, the industry employed just 1,900 workers that year, compared with more than 55,000 in the oil and gas industry (US Department of Energy 2023). State tax credits helped support the growth of wind, but at substantial cost to the state budget (Section 1.3), contributing to a backlash that has led some state officials to call for a moratorium on all new renewable energy projects (Holzman 2025). While the loss of public revenue from oil and gas due to recent changes in the tax code had larger effects on the state budget, none of the interviewees mentioned that those changes spurred any similar backlash to the oil and gas industry.

Oklahoma also partnered with Arkansas and Louisiana to seek federal funding for the “HALO” hydrogen hub, which proposed to build and operate an extensive infrastructure network for hydrogen production, transportation, and utilization. Although the project was backed by a substantial number of major energy companies, electric utilities, agricultural firms, and the Cherokee nation, the hub was not selected by the US Department of Energy for funding, making the full project unlikely to move forward in the near term (HALO Hydrogen Hub 2024).

3.2. Education and healthcare limitations impede economic diversification.

Oklahoma is governed by conservative policymakers who have prioritized limited government spending on a range of issues, including education and healthcare. This prioritization has helped keep the cost of living relatively low, with Oklahoma’s combined local and state tax burden ranking tenth lowest in 2022 according to one recent analysis (York and Walczak 2022). At the same time, this prioritization has meant less investment in areas where the public sector plays a major role.

As noted by several interviewees, Oklahoma consistently ranks near the bottom of US states for a range of educational outcomes. This has the potential to limit economic opportunities for the state and its residents, as some employers may seek a more highly educated workforce when determining where to invest. Retaining teachers has also been a major issue in recent years (Section 1.4), with the state issuing 25 times more Emergency Teacher Certifications for the 2023–2024 school year than it did a decade ago (Oklahoma State Department of Education 2022; Martinez-Keel 2024). These certifications create a pathway for individuals without any teacher training to work in public schools (provided they have a bachelor’s degree), raising questions about teacher quality (Martinez-Keel 2024).

On the other hand, our interviewees viewed Oklahoma’s CareerTech System as a successful model for workforce training, preparing workers effectively to participate in skilled trades across a range of industries, including oil and gas and aerospace. CareerTech is a long-running state-run network of technology centers that operate across Oklahoma to provide a variety of offerings, ranging from grade 5–12 courses to professional certifications to apprenticeships developed in partnership with local businesses. This service is offered at low or zero cost to residents who enroll in courses offered by the CareerTech center that serves their community (Oklahoma CareerTech 2024). Interviewees noted that CareerTech focused on training a workforce to meet current and near-term labor demand but is not designed to diversify the state economy.

Along with education, interviewees noted challenges with the state’s healthcare system that could impede economic growth opportunities. Oklahoma persistently scores as one of the worst states for health care access and quality (The Commonwealth Fund 2023), and did not expand Medicaid after the 2010 Passage of the Affordable Care Act until 2021 (Oklahoma Health Care Authority 2024). Interviewees argued that hospital closures in rural areas were making it harder to attract manufacturing and other sectors into those regions. Data on hospital closures indicate that although eight major rural hospitals have closed since 2005 in Oklahoma, this number does not appear to be an outlier relative to other rural US regions (The Cecil G. Sheps Center for Health Services Research 2024).

One contributing factor to hospital closures (that is not unique to Oklahoma) is a shortage of skilled healthcare workers (Mitchell 2024; E. Murphy 2024) across a variety of occupations. Along with efforts from the state and local universities to grow this workforce, the Cherokee Nation invested $40 million to build the Oklahoma State University College of Osteopathic Medicine, located in its capital of Tahlequah. The school, which enrolls Natives and non-Natives, awarded degrees to 46 students in its initial graduating class of 2024, training graduates specifically to provide care in rural and Native communities (Kemp 2024).

Finally, several interviewees argued that Oklahoma’s recently-enacted restrictions on abortion, which outlaw the practice with few exceptions (Guttmacher Institute 2025), would exacerbate healthcare challenges. In particular, they argued that the state’s laws would result in OB-GYN providers leaving the state, and that the resulting lack of access to women’s healthcare services would further deter companies and workers from moving to Oklahoma. From 2011–2021, the state’s number of legal abortions ranged from roughly 4,000 to 5,000 annually but dropped below 900 in 2022 (Oklahoma State Department of Health 2024).

3.3. Other politically divisive issues may deter investment.

Abortion is not the only politically divisive (and non-energy related) topic that our interviewees highlighted as impeding efforts to build a more resilient economy. Several highlighted a letter from 12 state legislators to the international electronics firm Panasonic, which was considering Oklahoma as the site for a large new manufacturing facility during 2022 and 2023. In the letter, the authors criticized Panasonic’s “advocacy and activism specifically in support of the LGBTQA+ community,” and argued that firms receiving state tax credits (such as those offered to Panasonic) “refrain from promoting and funding any kind of lifestyle the vast majority of Oklahomans believe runs contrary to the Bible and do not support” (Olsen 2022).

Although it is unclear what role this letter played in Panasonic’s decision, the company ultimately chose not to build its manufacturing facility in Oklahoma. One Republican lawmaker (who did not sign the letter) argued that the combination of issues related to education, healthcare, and “extreme conservative social issues” had dissuaded Panasonic from investing in the state (Weger 2023). Several of our interviewees echoed this sentiment.

Oklahoma City, however, presents more welcoming signals to members of the LGBTQA+ community. For example, the webpage of the city’s visitor’s bureau (part of the local Chamber of Commerce) highlights its celebration of Pride Month and bills Oklahoma City as “a place for all” (VisitOKC 2025). Of course, these signals do nothing to address recent laws that have negatively affected the lives of LGBTQA+ people living in the city and state (e.g., S. Murphy 2023; Aston 2025).

A second politically charged issue that had created challenges for attracting economic opportunity related to accepting federal funds for certain programs supported or created under the IIJA and IRA. One of our interviewees went as far as to state that they expected to be laid off if they used certain funds allocated under these laws.

A final anecdote comes from one interviewee who had decided that they could no longer live in Oklahoma because of the hostile environment related to their child’s sexual orientation. This interviewee, a self-described longtime Republican, argued that “my party left me,” and believed that the political environment related to abortion, LGBTQA+ rights, healthcare, and education would deter future investment and motivate other Oklahomans to leave the state.

3.4. Tribal nations within Oklahoma have new opportunities but continue to face challenges.

Oklahoma is home to 39 Tribal nations, each of which have their own histories and face their own circumstances (University of Oklahoma Department of Native American Studies 2024). Our interviewees represented two of those nations: the Cherokee Nation and the Kiowa (pronounced KAI-oh-wah) tribe (a third interviewee describes themselves as a Mescalero Apache/Lower Brule Lakota descendant). The results presented here should therefore not be interpreted as representative of other Tribal nations.

The Cherokee are one of the largest Tribal nations in the United States, with roughly 450,000 enrolled members, an estimated 141,000 of whom live on the Cherokee reservation in Northeastern Oklahoma (Cherokee Nation, n.d.). The Kiowa tribe, whose enrolled membership is about 11,000 according to recent press reports, settled on a reservation in southwestern Oklahoma in 1867 (Loveless 2024). However, subsequent allotment of the reservation and white settlement left the tribe with little collectively-held land, scattered in various parcels (Kiowa Tribe 2024). Tribal nations in Oklahoma face a unique set of governance circumstances relative to other Tribal nations, most recently because of a recent Supreme Court decision, McGirt vs. Oklahoma, which found that large swathes of the state were still in reservation status, despite the objections of the governor and other state officials (Kickingbird 2023). The consequences of this (and subsequent) Supreme Court decisions continue to unfold as Tribal nations further develop institutions to govern on these lands. Although this topic will have substantial implications for tribal economic development in the years to come, we do not focus on it here because it is outside the realm of our expertise and the ultimate outcomes remain uncertain across the dozens of tribes in the state. This patchwork of land ownership has made it more difficult to carry out economic development efforts, consistent with research demonstrating this effect on allotted reservation lands (Smith and Frehner 2010; Leonard and Parker 2021).

Our interviewees noted that Tribes, because of their governance structures, do not experience the same political dynamics as the state. As such, they are pursuing a range of opportunities related to BIL and the IRA, including expanding electric vehicle charging networks (Heliot 2025) and developing renewable energy projects, taking advantage of the “direct pay” option that makes it easier to access federal tax credits (Raimi and Davicino 2024). The Cherokee and Kiowa nations are also eager for oil and gas development to grow and boost revenue for Tribal governments and citizens. Both nations also implement a severance tax on oil and gas production that raises substantial revenues (data on severance tax revenues for the Cherokee were not publicly available, and our Kiowa interviewee estimated that the tax had raised $4.5 million during the first half of 2024).

The Cherokee nation has substantial revenues and capacity, in large part because of gaming, which has helped it offer free tuition for any tribal member wishing to pursue higher education. However, the rise of alternatives, including online gaming and a major proposed casino in the Dallas-Fort Worth area (Purdum 2023), threatens competition that could reduce revenues in the years ahead.

For the Kiowa nation, which is smaller, less developed, and lacks the capacity of the Cherokee, tribal leaders are more focused on developing basic infrastructure and attracting investment (including from the oil and gas industry). Unlike many other rural regions where internal capacity limits access to federal resources (e.g., Haggerty and Smith 2023), the Kiowa tribe has had considerable success applying for and winning federal grant dollars. October 2024 data reports that the tribe has accessed $4.7 million in orphaned well site remediation and $5.2 million in tribal transportation funding from the recent Bipartisan Infrastructure Law (White House 2024).

3.5. Local and state capacity remains a challenge in accessing federal funds.

Although the Kiowa tribe has had success accessing federal funds to support their priorities, this experience appears to be the exception rather than the rule. Consistent with our findings from other rural energy-producing regions of the US (Raimi and Whitlock 2023; 2024; Hitchcock and Raimi 2024), most local officials reported that capacity limitations made it difficult to successfully apply for federal funding opportunities under recent laws such as BIL and IRA. This included experts who worked in, or closely with, local, state, and tribal governments.

In particular, interviewees noted a lack of personnel who had the time to develop grant applications. In many cases, local and tribal officials were wearing “multiple hats,” making it impossible for them to take on additional responsibilities such as grant applications or management. In other cases, local government applications for federal funds to build infrastructure such as electric vehicle charging and small-scale solar were not successful, in part because those local governments had not completed sufficient planning and scoping activities to win the awards.

A long-term reduction in global oil and gas demand poses major economic and fiscal risks for the state of Oklahoma, rural oil- and gas-producing communities, and some Tribal nations within the State. However, Oklahoma is not making major efforts to build economic resilience and some policy choices are deterring potential investors. In the absence of state efforts, the federal government could work directly with local and tribal governments to enhance economic diversification, similar to the work carried out by the federal “energy communities” Interagency Working Group (Dalbey and Raimi 2024).

Oklahoma City, however, provides an example of how oil- and gas-dependent communities can build a more diverse and resilient local economy. The city has proactively sought to attract new industries and succeeded in developing substantial strengths in aerospace, biotechnology, and other growing sectors. The city has also “invested in itself” through the MAPS program, which has enhanced local public services, and amenities that improve quality of life.

At the same time, statewide weaknesses in public services like education and healthcare make it more difficult to attract large-scale investments. In addition, the US economy depends on workers from diverse backgrounds, and state policies and rhetoric on abortion and LGBTQA+ issues may deter some corporations from investing in Oklahoma.

Finally, as we have observed in other energy-producing communities (Raimi and Whitlock 2023; 2024; Hitchcock and Raimi 2024), capacity-building efforts are essential for local governments, Tribal nations, and state agencies seeking to access federal funding opportunities. To the extent that these funding streams remain available in the coming years, federal programs that directly fund local, Tribal, or state staff to manage grants and projects may be an effective way to enhance capacity.