THE ECONOMIC IMPACTS OF ENERGY PRICE CHANGES ON THE ECONOMY OF OKLAHOMA: AN APPLICATION OF AN INTERREGIONAL INPUT-OUTPUT PRICE MODEL

Scope and Method of Study. The objective of this study is to apply the methodology of an interregional input-output price model in forecasting impacts of energy price changes on the economy of Oklahoma. A two region input-output model was developed to show the structural relationships between Oklahoma and the Rest of U.S. for the benchmark year 1977. Regional and interregional multipliers were estimated for purposes of economic impact analysis. Particular attention was given to the application of an interregional input-output price model in measuring the impacts of energy price increases on the prices of other commodities produced in Oklahoma and the Rest of U.S. A modified input-output price model was developed to measure the final impacts of commodity price changes.; Findings and Conclusions. With actual real price increases for petroleum products of 153 percent in Oklahoma and 145 percent in the Rest of U.S. between 1977 and 1981, the interregional input-output price model showed that prices of commodities in Oklahoma increased from 1.02 percent to 43.16 percent. Price increases were highest in the following sectors: 43.16 percent for transportation and warehousing; 20.94 percent for paper and allied products, except containers; 17.34 percent for agricultural, forestry and fishery services; 16.39 percent for forestry and fishery products; and 16.21 percent for crops and other agricultural products. With real price increases for natural gas of 55 percent in Oklahoma and 66 percent in the Rest of U.S. between 1977 and 1981, commodity prices in Oklahoma increased from 0.20 percent to 17.28 percent. Price increases in the five most impacted sectors were 17.28 percent for electricity and hydropower; 4.30 percent for chemical and selected chemical products; 4.12 percent for paper and allied products, except containers; 3.91 percent for metal containers; and 3.21 percent for primary nonferrous metal manufacturing.