Oil, natural gas industry improvement accelerates
Recovery in the oil and natural gas industry has accelerated in the last year, and the Oklahoma Energy Index reflects that.
The index has seen an increase in 18 of the 20 months since falling commodity prices sent the industry in a tailspin. But significant growth came in 2017 when robust employment growth and an increased rig count pushed the index significantly higher. Overall industry activity was up 17 percent in 2017 compared to just 7 percent gains in 2016.
“The almost 30-point increase in the Energy Index shows the strength of the recovery the industry experienced in 2017,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “We continue to believe this financial environment creates the opportunity for companies to bolster their balance sheet while prudently developing assets.”
The most recent monthly Energy Index increased by 1.6 percent and stands at 200.0 using data collected in January.
Gains in the index this month were led by seasonal improvements in both natural gas and crude oil spot prices, which offset minor contractions in rig activity and employment. However, Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said falling commodity prices have already given those gains back and future growth in the energy index will be driven by employment figures.
“The economic outlook for 2018 remains positive, but we do expect the pace of improvement in the energy industry to slow,” Evans said. “Even as the pace of recovery slows, the industry is still expected to provided solid footing for a healthy state economy in the year ahead.”
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.