Hurricane Complicates Industry Recovery

A strengthening oil and natural gas industry has driven the Oklahoma Energy Index higher, pointing to an improving Oklahoma economy and setting the stage for continued recovery for the oil and natural gas industry and the state as a whole.

The most recent Energy Index stands at 170.3 using data collected in July. The 1.4 percent increase was driven by gains in all six components used to calculate the Index (natural gas prices, crude oil prices, rig count, energy production employment, energy production support employment and Oklahoma energy company stock value).
“The Energy Index is up 14.62 percent from the low in early 2016, which is encouraging,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “However, the volatility of the factors mentioned by Dr. Evans could impact future development plans and caution isn’t unwarranted at this time.”
Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said immediate demand and supply disruptions driven by Hurricane Harvey will have the biggest impact on the industry in coming months as oil and natural gas producers and refiners overcome temporary refinery closures on the Gulf Coast, shut in oilfields in south Texas and offshore and limited access to crude oil imports and exports due to port closures.
“Index gains in July were fed by a modest recovery in crude spot prices but the future price path remains very much uncertain,” Evans said. “Geopolitical uncertainty, rapidly growing U.S. shale production and a tenuous OPEC relationship were joined this week by the impacts of Hurricane Harvey to leave a complicated path forward for oil prices.”
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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