Sharply falling crude oil prices have resulted in the first decrease in the Oklahoma Energy Index in eight months and foretells an inevitable slowdown in oilfield activity in the months ahead.
Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said Oklahoma oil and natural gas companies have been forced to rethink capital allocation for the coming year thanks to the 38 percent decrease in crude oil prices over the past three months.
“As current budget commitments wind down and are replaced with more moderate budgets in 2019, oil and natural gas activity in the state will slow considerably,” Evans said. “A significant industry slowdown will extend to other areas of the economy with a general slowdown in economic activity expected to materialize in the second half of the year.”
The most recent Energy Index saw a decrease of 1.1 percent. However, the Index has grown by 10 percent from one year ago, and today stands at 227.7 using data collected in November.
The 19 percent decline in crude oil prices seen for the month was offset slightly by stable oil and natural gas industry employment and rig activity and increased natural gas prices, although Evans said those price gains are not expected to hold for the long term.
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 OIPA-OKOGA and the Steven C. Agee Economic Research and Policy Institute.