The latest Oklahoma Energy Index is showing an increase of more than 1 percent thanks to slow and steady growth in Oklahoma’s oil and natural gas industry.
The Energy Index, based on data collected in October grew by 1.1 percent from the previous month’s reading. It also indicated for the year, activity levels in the oil and natural gas industry are 10.7 percent higher. The Index is a measure of Oklahoma’s oil and natural gas production economy. It is a joint project of the Oklahoma Independent Petroleum Association, Bank SNB and the Steven C. Agee Economic Research and Policy Institute.
“It’s encouraging to see continued cooperation from OPEC and non-OPEC producers to help stabilize oil prices,” said Charlie Crouse, managing director of energy lending for Bank SNB. “Those efforts combined with meaningful inventory draws that late in the year have helped prices climb to the $56-$57 range, which creates a healthy operating environment for most producers in our region. If we can stay in that range and natural gas can stay at or above $3, 2018 should be a much stronger year for oil companies than 2017 was.”
Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said this month’s index increase is a sign of steady recovery from a sharp fall in 2014, a contrast to rapid industry recovery following the fall of commodity prices in 2009.
Following the great recession nearly a decade ago, Evans said, the oil and natural gas industry expanded at a monthly average of 1.7 percent. In contrast, the first 15 months of the current recovery have seen industry activity expand at a more modest average of 0.9 percent per month, a signal that the apex of this growth cycle will likely fall below pre-2014 levels despite continued growth in industry employment and commodity prices.
“Preliminary forecasts of economic and employment activity in 2018 point to more of the same in the year ahead,” Evans said. “The early forecasts point towards employment gains through much of 2018 with industry activity ultimately settling at a level well below the baseline set during the previous expansion.”
