Uncertainty Impacts Energy Index
New data from the Oklahoma Energy Index (OEI) shows that geopolitical uncertainty is taking its toll on the state’s defining industry.
The index, which saw growth in 18 of the past 20 months, contracted slightly in March. The most recent monthly Energy Index fell by 2.1 percent and stands at 196.9 using data collected in February. Despite the monthly decrease, oil and natural gas activity in the state remains 12.3 percent higher than one year ago.
“The possibility of production tax increases could potentially have a negative impact on activity in the state,” said Charlie Crouse, managing director of energy lending for Bank SNB. “However, with oil prices consolidating in the $60 to $65 range, we should still see positive activity in Oklahoma’s world-class resource plays.”
Rig activity, employment and crude oil spot prices are all higher than their 2017 levels, but February’s index decrease was driven by monthly losses in both crude oil and natural gas prices, with crude oil prices falling 2.3 percent and natural gas prices decreasing by more than 30 percent.
Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said the outlook for oil and natural gas prices remains cloudy due to continuing uncertainty surrounding trade wars and tariffs around the globe and political uncertainty in energy-producing countries like Iran and Venezuela.
“While improving conditions in the state’s oil and gas sector are expected to continue, the February contraction may indicate a transition to a slower pace of growth in the sector,” Evans said.
The OEI 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, Bank SNB and the Steven C. Agee Economic Research and Policy Institute.