Low oil, natural gas prices threaten investment in technology for investors across Oklahoma
By Scott Meacham
Copyright © 2016, The Oklahoma Publishing Company
Here we go again.
As a lifelong Oklahoman, I have lived through a number of booms and busts driven by the price of oil and gas. In Oklahoma, when we hear that oil is at a 12-year low, that is not a good sign. Since our state is so dependent on the energy sector, low energy prices are particularly bad news for our economy and for our state budget. Not surprisingly, in times like this people start pointing fingers at state economic policy.
And there’s plenty to question.
Why haven’t we been able to leverage the good times of the past into a more diversified economy? Why do state policymakers believe that there is any action that they can take to really insulate our economy from the global forces that drive energy prices? Why do we continually sacrifice Oklahoma’s long-term economic health for short-term budget problems?
In the short run, tax cuts, spending changes and incentives make little real difference, especially in the performance of an economy like Oklahoma’s that is so dependent on the price of oil and natural gas. However, state policymakers’ actions today can dramatically affect the viability and competitiveness of our economy in the future.
Some argue that the best way to solve the state’s short-term budget problem is to pull back from state investment in jobs, wealth creation and long-term diversification of our economy. Interestingly, following the last big energy bust in the 1980s, Oklahoma’s Legislature demonstrated the opposite vision, investing in innovation to present Oklahoma with its best opportunity for a diversified economy.
That Legislature recognized that much of the initial heavy lifting in encouraging innovation and the commercialization of that innovation had to be initiated by the public sector because it couldn’t happen any other way.
Today, in layering multiyear budget reductions on OCAST (Oklahoma Center for the Advancement of Science and Technology) — a proven job creation machine in nontraditional industries — we are encouraging less innovation and making it more challenging for Oklahoma’s investors and entrepreneurs to start new companies.
It’s time to push the pause button on the political and philosophical debate about the role that tax cuts and incentives have played in our state’s current budget crisis. Let’s get moving instead on a practical plan that applies the levers of government in a smart and appropriate way to create wealth and jobs across the state for the long term.
There is a vital role for government to play in economic development — when a state lacks robust private innovation and commercialization resources, when strategic diversification needs to occur in an economy that is over-dependent on one sector, and when there are opportunities that require greater investment than the private sector can or is willing to make. The evidence for government applying strategic support for innovation, commercialization, and new industries has a significant track record in the U.S.
I’m glad that we live in a state replete with a natural resource like oil. But it’s not smart or strategic to limit ourselves and our futures to the vagaries of the price of oil.
We can and must move past philosophical debates about laissez-faire government and toward a balanced role for government that can accelerate industry diversification.
Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Email Meacham at [email protected].
Did you know?
The rate of entrepreneurship in the U.S. increased 10 percent in 2015 to 310 per 100,000 adults. That translates to about 530,000 new business owners each month during the year.
Source: Kauffman Foundation