Holy Deficit, Batman! It's Worse Than I Thought -- Absolutely Nothing To Do With the Bakken -- California's Deficit

Jerry Brown blames Jerry Brown: it's worse than I thought!

Updates

May 13, 2012: The state's deficit balloonw from $9 billion to $16 billion and they're still talking about a bullet train that leads to nowhere. Headline story in LA Times -- the bullet train would require spending of $3.5 million/day --

The bullet train track through the Central Valley would cost $6 billion and have to be completed by September 2017, or else potentially lose some of its federal funding. It would mean spending as much as $3.5 million every calendar day, holidays and weekends included — the fastest rate of transportation construction known in U.S. history, according to industry and academic experts.

Original Post

The great California exodus (see comments; link added after original post).

California's deficit balloons from $9 billion to $16 billion.

Meredith Whitney noted this last month.

For a running commentary of states in trouble, click here.

Now back to the linked story published today:

Gov. Jerry Brown announced on Saturday that the state's deficit has ballooned to $16 billion, a huge increase over his $9.2-billion estimate in January.

The bigger deficit is a significant setback for California, which has struggled to turn the page on a devastating budget crisis. Brown, who announced the deficit on YouTube, is expected to outline his full budget proposal on Monday in Sacramento.

"This means we will have to go much further, and make cuts far greater, than I asked for at the beginning of the year," Brown said in the video.

Lawmakers and others were hoping that a rebounding economy would help the state avoid steep cuts to social services. But revenue in April, the most important month of the year for income taxes, fell far short of expectations, leading to a shortfall of at least $3 billion in the current fiscal year.

The state has also spent $2.1 billion more than expected, according to the controller, further worsening California's financial health.

The article did not mention anything about the "bullet train to nowhere."

Brown's solution: increase taxes. No specifics on cutting spending. My hunch: even if the folks in California vote to increase taxes in the November election, California will have periods of running out of cash to pay its bills. It takes awhile for tax increases to actually show up as increased revenue, and of course, some folks affected by increased taxes will take steps to minimize them.

From Bloomberg:

Brown this week submitted more than 1.5 million signatures to place the tax measure on the ballot. It would temporarily raise the state sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. It would also boost rates on income starting at $250,000. The 10.3 percent levy on those making $1 million or more would rise to 13.3 percent, the most of any state.

I wonder how many A-list Hollywood actors, with multiple homes around the world, claim California as their state of residence?

Income tax, property tax, and now the highest sales tax in the US. Incredible. I wonder when California will push for increased off-shore drilling?

"Williston Is In the Early Stages of A Huge Summer" -- The Bakken, North Dakota, USA

The following was sent in as a comment.

In case some folks don't see the comment, here it is:

I think Williston is in the early stages of a huge summer.

There will be the permitting and ground breaking of the new $70 million recreation center this summer.

Sand Creek Town Center broke ground and said they will have building and businesses operational this fall.

And a couple out-of-state developers who are currently finishing up some projects are getting ready to announce some huge projects. From both Braxton out of Bozeman (600 units of mixed housing with club house) and Brutgers out of St. Cloud with an 800-unit apartment complex. Not to mention just so many other projects getting ready to permit and break ground.

My bet is still on Williston out of all the ND towns for permit values.

Below is the link to Brutgets new project:

http://www.brutgerequities.com/residential/renaissance_heights/renaissance_heights.html

Exciting!
 

Man-Camps: To Grow Or Not Grow

This link to the Grand Forks Herald sent to me by a reader.

“We thought that they were a solution when it started,” said Williams County Commissioner Dan Kalil. “But then it got to be such a land rush that it just got way out of hand.”

Williams County, with Williston as the county seat, has approved 9,600 temporary housing beds. But now it has implemented a moratorium on new temporary housing facilities.

But many say the crew camps — particularly the larger camps that are professionally run – are a necessary solution to the housing shortage, which in turn is contributing to a workforce shortage.

Jeff Zarling, president of Williston business development firm DAWA Solutions Group, said he thinks the man camp moratorium is having negative consequences.

Companies are buying single-family houses and crowding several workers in them, or putting up RVs in a disorganized fashion, Zarling said.

I've talked about this before. When folks are waiting for "their" well to come in, they can't advocate for man-camps strong enough to get the necessary workers in state; once "their" wells have come, it's time to slow things down, I guess.

Reminder: Montana Oil Report

A reminder: this is the link to the Montana energy report.

I am thrilled that this blog exists; a lot of folks write in asking for more information on Montana. I simply don't have time to follow much more than the North Dakota Bakken, so this site is quite welcome.

[On a separate note: the blog linked above was "lucky" enough to go with "wordpress" as the blogging application. The blogging application I use, "blogger" is a pain and if it were possible, I would move over to "wordpress."  I am not the only who feels this way. "She Blogged By Night" feels the same way.]

Wow! The 3,100 Bed Man-Camp Coming to Watford City

Link here to the website.

A big "thank you" to "anonymous" for sending me the link. This is quite incredible.

Huge "Thank You" to Oil Service Company Cleaning Dickinson Roadside

A reader sent me a note telling me that he/she had noted an area oil service company cleaning up the roadside in the Dickinson area.  I suppose it was similar to the initiatives in which a company or organization "adopts a two-mile section of highway" to keep it clean.

The reader was very, very impressed. He/she did not remember the name of the company but thought it was something like "East Well Company."

He/she also noted that we don't see enough of these stories printed in the local newspapers, even a short blurb, perhaps a photo with a caption would be enough.

Anyway, I digress. A big "thank you" to the reader, and a bigger "thank you" to the oil service company cleaning the roadside.

Filloon on Whiting -- 1Q12

Link here.

In summary, Whiting has seen some decent returns from the Bakken and its EOR projects. It also has a good start in its Wolfcamp and Niobrara areas. Whiting's earnings miss can be attributed to several things. The first is a company wide oil differential of $12.43 per barrel from NYMEX. In the second quarter it expects this to be in a range between $12.50 to $13.50 per barrel and $12 to $13 for the full year. DD&A charges were higher than expected, but this has been seen by most if not all the operators in the Bakken.

Whiting continues to be a value and sells for a discount when compared to other companies with similar assets. It has done a very good job of adding acreage in plays with lower well costs, which should help to offset higher costs in the Bakken. Look for Whiting to maintain higher margins, while increasing production.

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