Crude Contagion: California's Kern County Declares Fiscal Emergency Due To Plunging Oil Price

At this point only an act of god, or a sudden Saudi change of heart to cut crude production by 50% (unclear which is more probable) can prevent a recession in Texas. However, one state that few thought would be impaired as a result of the crude plunge, is California. Yet as the LA Times reports, it is precisely California, and specifically Kern County located in the middle of the state and containing the farmer town of Bakersfield and countless oil rigs, that yesterday declared a state of fiscal emergency during the weekly supervisors' meeting on Tuesday. The reason: predictions of a massive shortfall in property tax revenues because of tanking oil prices.

Oil companies account for about 30% of the county’s property tax revenues, a percentage that has been declining in recent decades but still represents a critical cushion for county departments and school districts.

According to the LA Times, as a result of the plunge in crude prices which is primarily driven by the de-financializaition of crude futures and the collapse in Chinese demand coupled with a relentless and rising production quota by the marginal, junk-bond funded producers (and everyone else) Kern, the heart of oil production in California, is facing what could be a $61-million hole in its budget once its fiscal year starts July 1, according to preliminary calculations from the county’s assessor-recorder office.

http://www.zerohedge.com/news/2015-01-28/crude-contagion-californias-kern-county-declares-fiscal-emergency-due-plunging-oil-p

Crude Contagion: California's Kern County Declares Fiscal Emergency Due To Plunging Oil Price

Crude Contagion: California's Kern County Declares Fiscal Emergency Due To Plunging Oil Price

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