Employment, Drilling Activity Hamper Energy Index
Shrinking employment and declining drilling activity across the Sooner State continue to impact the Oklahoma Energy Index.
The Oklahoma Energy Index contracted for the 17th consecutive month in May, leaving activity in the state’s most defining industry 27 percent lower than the year before. The index of oil and natural gas industry activity fell to 157.4 using data collected in April, a 2.7 percent decrease from the previous month’s reading.
“The improving oil prices continue to be a welcome sign,” said David Sine, market president of Oklahoma City for Bank SNB. “However, it appears most industry participants are remaining cautious while waiting to see if the price increases are sustainable and if industry liquidity improves.”
Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said the Energy Index continues to be weighed down by shrinking industry payrolls driven by declines in drilling activity. Active rig counts fell by 5 rigs, or down 7.5 percent to an average active rig count of only 62 rigs in April. Rig activity fell even further in May.
“Employment in both exploration and production activities as well as support activities fell in April as companies cope with the realities of a financial situation that is nearly two years on and only just showing signs of abating,” Evans said. “As prices recover, exploration and production activity is expected to recover at a judicious pace, but even if the expected recovery materializes later this year, it may be some time yet before the state’s economy returns to full strength.”
The Energy Index is a comprehensive measure of the state’s oil and natural gas production economy established to track industry growth rates and cycles in one of the country’s most active and vibrant energy-producing states. The OEI is a joint project of the Oklahoma Independent Petroleum Association (OIPA), Bank SNB and the Steven C. Agee Economic Research and Policy Institute.
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