Energy Index—Worst Yet to Come

“The worst of this economic period still lies in the future.” Dr. Russell Evans.

Another report suggests Oklahoma’s oil and gas industry is struggling in the downturn. The Oklahkoma Energy Index continues its downward trend and the correlation between the index and statewide private employment suggests ongoing economic struggles for the industry and the state.

The index of oil and natural gas industry activity fell to 193.8 using data collected in November. That’s a 3 percent decline from the previous month’s reading and 27 percent below year-ago levels.

The November decline marks five consecutive months of contracting industry activity, with industry contraction averaging 2.5 percent per month, according to the Index released by the Oklahoma Independent Petroleum Association, Bank SNB and the Steven C. Agee Economic Research and Policy Institute at Oklahoma City University.

“As the index declines once again, it appears to be searching for a bottom,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “Early 2016 will require continued perseverance and patience within the industry.”

Watching the industry developments is Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute. He said private employment in Oklahoma follows the ups and downs of the oil and natural gas industry and that relationship stalled in 2015. Evans said private employment managed a lateral move even as the industry contracted sharply, giving some false hope that the state is well-positioned to endure the lingering and strengthening economic storm.

“This is unlikely to be the case,” said Dr. Evans. “Statewide data is a reflection of the ability of Oklahoma City to keep the worst at bay through much of 2015. Recent data suggest the Oklahoma City economic experience will yield to the pressures of the contraction as the rest of the state already has. The worst of this economic period still lies in the future.”


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