Oil, natural gas industry drives economic growth
Urban and rural Oklahoma are both expected to make economic gains in 2018 thanks to an ever-improving oil and natural gas industry.
Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said the most recent Oklahoma Energy Index (OEI) points to strong economic gains across the state, with rural Oklahoma benefitting from increased activity in oil and natural gas fields and metropolitan areas boosted by the overall economic strength generated by increased employment and boost in gross domestic product provided by the energy industry.
“The current price levels and ability to hedge at higher prices are having a positive impact on the industry's cash flow. It creates a continued opportunity to address debt levels and develop assets in Oklahoma,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “The sustained increase in employment levels within the industry is a positive trend for both the state overall and our fellow Oklahomans.”
The most recent Energy Index increased by just 0.6 percent but marks seven straight months of upward movement in the index. Using data collected in December, the Energy Index stands at 180.7, an 11.3 percent increase from one year ago.
The month's index gains were led by increases in crude oil prices and the Oklahoma Energy stock portfolio, a measurement of publicly traded, Oklahoma-based oil and natural gas businesses. Price gains complemented modest but consistent gains in employment in the exploration and production as well as the support sectors of the industry.
“The recent run-up in oil prices is a welcomed surprise,” Evans said. “While we expect markets to give up some of those price gains in the first half of 2018, we do expect oil prices to stay above critical levels necessary to maintain activity in Oklahoma's oil fields.”
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.