Based upon the assumptions about the course of the pandemic described previously and our analysis of economic factors, prior business cycle patterns in periods of crisis, and the likely impacts of changes in operations and customer behavior, we forecast a decline in tribal agricultural revenue of 18.0 percent for 2020. For 2021, we forecast an increase in tribal agricultural revenue of 17.6 percent from 2020 levels as recovery begins, still leaving the industry 3.5 percent below estimated 2019 levels. In 2022, full recovery is forecast to occur, with revenue up 4.5 percent from 2021. Total tribal agricultural revenue in 2022 is forecast to exceed 2019 levels by slightly less than one percent. This information is presented in the graph on the following page. Mining & Extraction The oil and gas extraction side of the sector has been devastated by plummeting demand coupled with an extraordinary drop in prices. For a brief period, oil futures actually traded at negative prices, meaning traders were willing to pay someone to take oil off their hands to make room for new oil still being pumped. Unlike milk or eggs, they cannot simply flush it down the drain. While that occurrence was short-lived, prices continue to be far below sustainable levels for producers. Intensive demand declines due to the pandemic and mitigation efforts were certainly an instigating factor, but not the only cause. A major price war between Russia and Saudi Arabia further exacerbated the problem. On a long-term basis, new production agreements between OPEC and other oil producing countries should alleviate that aspect. However, the demand decline will continue to weigh on prices and volume for much longer. Within the U.S., as well as Canada, the greatest impact from the collapse in the oil markets has been the disruption to the shale-oil segment. The U.S. rode advances in drilling and extraction technology that made shale-oil profitable to new production highs and massive new development in oil producing areas. Those, in turn, spurred significant new employment, population growth and household income growth in those areas while boosting tax revenues for the states. Tribes in the same regions benefited from the boom, some directly through extraction of their own reserves, and many other indirectly from spinoff demand. Unfortunately, the price and demand collapse has destroyed the economic model that supported profitable shale-oil extraction. While the industry will not disappear, it will be severely impacted for a long time. A secondary result is the likely shift in natural gas production and pricing, an ancillary product of shale-oil extraction that became so plentiful that it was burned off in many cases, but also sold for much lower than normal prices to utilities. In reality, a boom and bust cycle is nothing new for oil extraction, or for any mining or extraction business. Fields and veins are discovered, exploited to the maximum degree profitable and then abandoned as they become more expensive and as new areas are found. What is more unusual in this cycle is the speed with which it occurred and the fact that it was not a foreseeable response to tapping an area out but an unexpected drop in demand and pricing below profitable levels.
∴ PROGNOSIS
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