Energy Index Continues Downward Trend
The most recent Oklahoma Energy Index contracted sharply, suggesting a prolonged period of oil and natural gas industry stagnation and echoing a similar recession-driven downturn seven years ago.
The index of oil and natural gas industry activity fell to 208.9 using data collected in August, a 4.3 percent decrease from the previous month’s reading and 22.5 percent below year-ago levels. All index components moved lower with the exception of steady employment levels reported in both the primary and support sectors of the oil and gas industry – a short-lived trend that is not expected to continue considering recent employment reductions.
“While the energy market remains challenging,” said Chris Mostek, senior vice president of energy lending for Bank SNB, “we continue to see many energy companies in Oklahoma prudently managing this environment by reducing expenses and altering development plans.”
August marks the ninth consecutive month of year-over-year contraction in the energy index – a streak only matched by the 17 consecutive monthly year-over-year contractions experienced in the 2008-2009 recession. Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said the previous industry downturn offers significant insight into how long this downturn will last and when recovery will begin.
“We expect a slow improvement over time,” Evans said, “with the entire peak-to-trough cycle that began in September 2014 running several years.”
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.
MEDIA RELEASE Contact: Cody Bannister at 405-601-2899