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Energy Index shows industry expects continued strength

December 12, 2018
Little one-month change in the state’s oil and natural gas industry foretells the potential for a volatile future according to the economist who compiles the Oklahoma Energy Index.

Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said while employment, oil and natural gas production and drilling activity are all outperforming 2018 expectations, volatile commodity prices could make current levels of oilfield activity unsustainable.

“The Oklahoma economy continues to benefit from the strength in its defining industry.  It is unwise, however, to assume that current levels of prices, production, employment, and drilling will sustain themselves indefinitely into the future,” Evans said.

“National economic conditions will weaken somewhat in 2019, opening the door to the possibility of a more significant disruption in 2020. Policymakers should begin to focus now on practices that will help the state manage the economic cycles that surely lie ahead.”

The most recent Energy Index saw an decrease of 0.3 percent. However, the Index has grown by 13 percent from one year ago, and today stands at 227.2 using data collected in September.

Spot prices, employment, and rig counts were all little changed for the month. Crude oil prices fell abruptly, but an increase in natural gas prices will help to offset the negative impact of falling crude prices. Any offsetting price gains are likely to last through the winter months only, Evans said, with production increases responding to any price increase to limit the possibility of sustained higher prices.

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.
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