Russia, Iran may foil OPEC plan to cut oil production

Russia, the largest oil-producing country that is not a member of the Organization of Petroleum Exporting Countries (OPEC), has signaled some resistance to pressure from the cartel to cut oil production. Iran, an OPEC member, is also fighting back against the cartel, saying it won't cut its own production of crude oil.

Russian and Iranian resistance to OPEC's wishes to cut production might be good news for consumers who will continue to pay less at the pumps to fill up their cars, but could be more bad news for Wyoming's economy which is suffering in part because the price of oil remains so low that oil extraction in the state is not economically feasible.

Early last week when OPEC said it would cut production, oil prices went up slightly but stayed below $50 per barrel. Goldman Sachs analysts in New York issued a note saying that oil, in the short term, would remain cheap, but the current market surplus of crude and refined fuels could revert to a shortage by the middle of 2017. Such a shortage, Goldman said, could lead to increases in the price of oil.

Russia's and Iran's resistance to OPEC could keep prices lower. Tuesday, following Iran's announcement that it would not cut oil production with OPEC, the price of crude oil slid nearly 4.5 percent in trading in London.

At press time, the price of crude oil is about $45 per barrel, down from about $48 last week after OPEC announced its decision to cut production.

Iran's and Russia's recalcitrance in cutting production might be good news for consumers across much of the nation. The most recent predictions by the U.S. Energy Information Administration (EIA) predicts that the cost of refined fuels such as gasoline, diesel and aviation fuels in 2017 will remain close to the prices consumers paid in 2016.

EIA predicts that the price of oil will remain near $50 per barrel in 2017.

For Wyoming's economy, low prices at the pump means suffering in the state's largest industry, oil and coal production. Between October 2015 and October 2016, Wyoming's unemployment rate increased from 4.3 percent to 5.1 percent, the third largest increase in the U.S. in that time, behind Pennsylvania and Oklahoma.

Wyoming's increase in unemployment runs counter to a nationwide trend. The unemployment rate for the U.S. decreased from 5.7 percent in January 2015 to 4.9 percent in January 2016, where the rate remains as of October 2016. The nationwide unemployment rate has been holding steady, even as more Americans are entering the job market, according to the U.S. Bureau of Labor Statistics (BLS).

The country has also seen a slight uptick in wages, according to the BLS. Wyoming, by contrast, has seen average wages decrease by 2 percent, according to figures released by the Economic Analysis Division of the Wyoming Department Administration and Information.

Wyoming, which relies heavily on the mineral extraction industry for tax revenues, saw a general fund tax revenue decrease of 4.5 percent. The state's budget reserve account was down by 17.2 percent. State severance tax revenues were down 10.8 percent between 2015 and 2016, and federal mineral royalties were down 10.5 percent over the same period.

The state is facing a $157 million shortfall for the fiscal year.