Energy Index Ebbs and Flows a Sign of Recovery
The marginal ups and downs of the Oklahoma Energy Index are signs of recovery in the state’s oil and natural gas industry, said the economist who compiles the monthly data used to track industry growth.
The Energy Index, a measure of oil and natural gas industry activity, fell slightly to 154.8, a 1 percent decrease from the previous month’s reading. Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said the marginal decrease is another sign the industry has reached the bottom of its recent contraction.
“Oil and gas prices remain an unsteady component of the Oklahoma Energy Index,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “With the other components showing more stability, pricing is driving much of the monthly Index change. We believe similar levels of price variability are likely to remain through 2016.”
Despite gains in natural gas prices and drilling activity in the state, the Energy Index declined on an 8 percent drop in crude oil prices and a 2 percent fall in both energy production employment and support employment.
“Statewide economic conditions are transitioning from a period of acute distress to recovery, with full economic health still a distant aspiration unlikely to be realized until 2018,” Evans said. “A local recovery will need to be accompanied by stable national activity — a condition that cannot be taken for granted. Both UBS and JP Morgan Chase currently put the odds of a U.S. recession in the next 12 months at better than 35 percent, a particular concern to a state struggling to find its footing in the current commodity price cycle.”
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.
Contact: Cody Bannister at 405-601-2899