Energy Index Shows Growth in Oil and Gas Industry
For the first time since 2014, the Oklahoma Energy Index posted positive gains, renewing optimism in the belief that the economic downturn that has plagued the state’s defining industry is waning.
The Energy Index, a measure of oil and natural gas industry activity, stood at 157.6 using data collected in May, a 3.2 percent decrease from the previous month’s reading. The increase marks the first growth in the index since October of 2014.
“The increase in the index would support the belief that a bottom may possibly be forming for this cycle, but that is not a given,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “Customers continue to be understandably cautious given the price volatility and global economic uncertainty.”
Index growth was driven by solid gains in both crude oil and natural gas prices, steady rig activity in the state and decreased employment contractions within the industry. The slowing pace of personnel contractions further lends hope that the state’s leading oil and natural gas producers are close to stabilizing both balance sheets and payrolls.
Despite the positive turn, Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, warned that an end-of-July downturn in commodity prices coupled with overall U.S. economy concerns could mire industry growth in coming months.
“The U.S. economy is anticipated to have expanded robustly in the second quarter, but warning signs are developing that the second half of the year may disappoint,” Evans said. “It remains to be seen how much of the U.S. economic concerns are real and how much is simply a reflection of the anxiety caused by a Brexit vote and a particularly tumultuous U.S. election season.”
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