Oil's Fall Sends Energy Index Downward
A tumultuous turn in crude oil prices has sent the most recent Bank SNB Oklahoma Energy Index (OEI) into negative territory.
The index of oil and natural gas industry activity fell to 215.28 using data collected in July, a 2.1 percent decrease from the previous month’s reading and 19 percent below year-ago levels. The official July index reading is the lowest reading in four years, coming in at a level not seen since May 2011.
“The Energy Index is showing similarities to prior industry downturns,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “While challenging times may be ahead, the industry has proven resilient in the past.”
Two of the index’s four components did move modestly higher in July, as the monthly average natural gas price increased from $2.78 to $2.84 and support employment grew by approximately 300 positions. Those minor gains, however, were far overshadowed by a 15 percent fall in crude oil prices, the corresponding fall in Oklahoma energy company stock value and a loss of 400 jobs in oil and natural gas production employment. Rig counts were unchanged in July, holding at a monthly average of 106 rigs.
“As the industry moves deeper into the current low price environment, economic stress is increasingly expected to carry deep into 2016,” said Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute. “Cost containment measures are likely.”
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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