News across multiple fronts – business, health, schools, and the economy – is impacted hourly by the global COVID-19 pandemic. But what about local interests? We have the bullet points you need for today.
- Yesterday’s oil free-fall could impact school funding
- Community-Based Testing Sites now open to testing wider group
- “Containment” is how we get back to work
- Dallas Stars step up for community during coronavirus crisis
Yesterday’s Oil Free-Fall Could Impact School Funding
With the price on the May futures contract for West Texas crude oil in free-fall Monday, worries may turn to a state program that funds public schools.
The price for May contracts on West Texas Intermediate oil expires today, and closed at minus $37.63 a barrel Monday. How does this have any relation to COVID-19?
Simply put, demand. With fewer people driving to work, school, or even trips, and fewer flights – plus a slowed-down economy – demand is down considerably, and unused oil means that it’s difficult to find a place to store it – which means, literally, that some traders were paying almost $38 to anyone willing to take a barrel.
“Today’s market activity was unprecedented and likely indicative of very limited storage capacity. May contracts traded well into negative territory as the market prepares to shift focus to June contracts,” Texas Comptroller Glenn Hegar said in a statement Monday. “While down somewhat, June contracts traded in a relatively stable range.
“While this unprecedented volatility is concerning, the greater impact to Texas will come if demand remains historically low for a prolonged period of time and supply gluts continue to strain storage capacity.”
Demand worldwide has dropped about 30% since the pandemic began to spread, too.
And because of that, nobody wants a May crude contract that is about to expire – if you still have one, you’re going to have to take possession of 1,000 barrels of oil.
“Oil traders that still have contracts are selling at whatever price they can get because they do not (all) have the ability to take physical delivery,” Alex Gilbert, a fellow with the Payne Institute for Public Policy, explained in a Twitter thread Monday. “Storage and refiners are not buying.”
Even more concerning? June finished the day at a dismal $20.43 per barrel. For comparison’s sake, the first week in January WTI closed at $63 a barrel.
Hegar said to expect a reduction in state revenue if the downturn continues.
“Severance tax reductions would primarily affect the state’s Rainy Day Fund and State Highway Fund, and to a lesser extent general revenue available to meet budget needs,” he said. “Contraction in the energy industry also will affect other sources of tax revenue, including sales and franchise taxes.”
One of the items funded in part by oil and gas taxes (25% to be exact) is the Foundation School Program, which is also funded by other state tax revenue (including funds from the state Property Tax Relief Fund), the state lottery, and the Permanent School Fund, which is an endowment established by the state constitution more than 165 years ago.
The Foundation School Program, in turn, funds the state’s public schools through a series of formulas.
But the Permanent School Fund (or PSF) also relies somewhat on oil and gas interests, too. It’s the largest educational endowment in the country at about $41 billion, with Harvard’s coming in second. The PSF is made up of land and investments that help support public schools. The State Board of Education oversees a Permanent School Fund portfolio worth $34 billion, while the School Land Board oversees about $8 billion in additional Permanent School Fund investments.
The revenue comes from investments, as well as land leases, mineral leases, oil and gas revenue, and grazing, agriculture, commercial, and right-of-way uses for land that makes up the PSF.
Hegar indicated Monday his office is monitoring the situation, and may be forced to reduce its revenue forecast due to be released in July.
“The Texas budget is based on the average price of oil in each year of the biennium, thus daily market activity doesn’t significantly affect revenues, which are forecast based on average prices rather than spot prices or prices for specific futures contracts,” he said. “That being said, given the historic nature of today’s market moves, we are carefully monitoring trading as June contracts come into focus.
“Should prices remain depressed over a long period of time, we anticipate the impact will be reflected in a reduction in the revenue forecast we’ll be releasing in July.”
Community-Based Testing Sites Now Open to Testing Wider Group
Testing sites at Ellis Davis Field House and American Airline Center have a wider criteria now, city and county officials announced.
The sites will now test first responders, DART drivers, healthcare workers, grocery store and essential retail store workers regardless of whether they have symptoms or not.
For everyone else, the same criteria applies – to be tested, you must have a temperature of 99.6 degrees or more and have shortness of breath or a cough; or you must be 65-years-old or above; or have chronic health issues like asthma, diabetes, or heart issues.
For more information on the CBTS and city resources, go to dallascityhall.com/covid19.
“Containment” Is How We Get Back To Work
As Gov. Greg Abbott’s strike force begins sussing out the best ways to reopen the economy, what is the safest way to do so? What does that involve, when it comes to best practices?
“The process of containment is the way we get back to work,” says Dr. Robert Haley, chief of epidemiology at UT Southwestern. “Supervisors and CEOs need to realize this is the way we get back to work and stay at work. They need to exhibit leadership in their company, give directions to their personnel and provide sick leave if their employees get sick.”
Dallas Stars Step Up for Community During Coronavirus Crisis
The Dallas Stars have been spending their time off the ice helping the community, to the tune of $400,000 in donations and counting.
The Dallas Stars Foundation donated meals daily from March 30 to April 14 for the 140 people working at the Federal Medical Station, the Ellis Davis community-based testing site, and the emergency operations center at Dallas City Hall.
They’ve also created a “Quarantine in Victory Green” shirt, with proceeds from the sales going to help raise funds for the foundation’s COVID-19 relief fund, and have also partnered with Dallas county to raise funds to purchase personal protective equipment and hand sanitizer for first responders.
Additionally, they’re continuing their Stick with Reading and Future Goals educational programming online, and have donated food from Comerica Center to the North Texas Food Bank and other charities after events there were suspended.
— Dallas Stars Foundation (@DS_Foundation) April 15, 2020
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