High Oil Prices Good for Texas Budget
Source: Associated Press, April Castro (3/30/11)
"State's Rainy Day Fund set to get bigger. A lot bigger."
The money is coming from Texas oil producers who have increased their rig counts to take advantage of prices that spiked in mid-February, when fighting in Libya squeezed off shipments that had supplied nearly 2% of the world's oil.
A percentage of the price from every barrel of oil produced in the state—now fetching about $104 each—goes into the state's Economic Stabilization Fund, commonly known as the Rainy Day Fund.
It's way too early to know how big the fund will get or whether the Legislature will overcome political opposition to using it. The Texas House will take up a proposal Thursday to tap the Rainy Day Fund to pay off $3.2 billion in state debt due in August.
But most experts agree: the fund will get bigger than current projections. A lot bigger. Based on an estimate of oil at $70 per barrel, the state comptroller forecast a $9.4 billion balance in the fund at the end of the next budget period. Prices have been well above that since last summer.