War-Driven Oil Price Surge Boosts Tax Revenues for Select States
Geopolitical conflict in the Middle East has brought higher oil prices, benefiting U.S. states that rely on taxes from oil production.
States like Alaska and New Mexico are seeing increased revenue projections due to high severance tax revenues caused by the recent spike in oil prices.
According to Lucy Dadayan, a principal research associate with the Tax Policy Center, it's challenging for governments to predict tax revenue, especially for states that rely heavily on oil production taxes.
John Diamond, senior fellow at Rice University's Baker Institute, notes that when oil prices are high, severance tax revenues 'drive way up.'
New Mexico has recently capped how much of the state's general fund comes from oil and gas to mitigate reliance on volatile revenue sources.