Oklahoma Energy Index Shows Strength Despite Concern Over Possible Recession

The latest monthly release of the Oklahoma Energy Index (OEI) reflects optimism in Oklahoma’s economy and the state’s oil and gas industry. Petroleum Alliance of Oklahoma President Brook A. Simmons points to geopolitical events and drilling activity as two positive factors. Public officials are compelled to recalibrate the role that stable, affordable energy supplies play in national security. Workers are also returning to oilfield jobs as drilling activity has returned to pre-pandemic levels. Oil sector employment is expected to rise as more rigs are returning due to industry growth.

“We need affordable, reliable energy,” said Simmons. “Oklahoma’s crude oil and natural gas industry will provide it. Our producers are increasing both drilling budgets and production to meet those needs, and our midstream and downstream sectors are hard at work processing and moving product to where it is needed most.”

Oklahoma’s energy industry is holding strength in these uncertain economic times as the OEI revealed the industry expanded 2.2% for the month. The gains were led by new hires in both the primary and support sectors of the industry, additional rig activity and higher crude oil spot prices. The index is now up 34.1% from a year ago and stands at 131.5.

Although the nation is fearful of a recession with the decline in the gross domestic product, Dr. Russell Evans with Regional Economic Advisers LLC said the impact of such an economic downturn could be mitigated locally by the strength of the state’s oil and natural gas industry. Evans believes Oklahoma’s real GDP growth is tied to growth in the oil and natural gas industry, with the state’s GDP growing by 3.7% from 2005 to 2015 thanks to a strong and growing oil and natural gas industry. From 2015 to today, the industry weathered two significant downturns. Oklahoma’s GDP growth plateaued at just 0.4% per year in that time frame.

“Recessions are not easily defined and like Oklahoma tornados are often only fully measured in hindsight as the economic damage is revealed,” said Evans. “As the state’s defining industry, persistent and robust economic growth depends on strength in the oil and natural sector. The industry is undoubtedly gaining strength, and the state undoubtedly will need that strength in the challenging months that lie ahead.”

The OEI is a comprehensive measure of the state’s oil and natural gas economy established to track industry growth rates and cycles in one of the country’s most active energy-producing states. It is a joint project of The Petroleum Alliance of Oklahoma and Regional Economic Advisers LLC.

To read the full report, see Energy Index: Energy industry helps dampen recession potential – Petroleum Alliance (thepetroleumalliance.com).