Eighteen months into the post-COVID recovery, Oklahoma’s oil and natural gas industry is gaining strength.
The most recent Oklahoma Energy Index (OEI) shows the state’s oil and natural gas industry expanded at a 4% pace, with every component of the Index posting gains. Natural gas and crude oil spot prices averaged $8.14 and $109.55 respectively for the month while the industry added an estimated 400 jobs according to the most recent data from the Bureau of Labor Statistics. Rig activity is also slowly climbing, with a weekly average of 57 active rigs for this Index. The Index now stands at 143.5.
“The fact that 18 months into this recovery the industry is roughly where it was at during the low points of the two previous cycles underscores the potential growth yet available in the period ahead,” said Dr. Russell Evans, principal and founder of Regional Economic Advisers LLC. “The U.S. economy is clearly slowing, and a coordinated effort across central banks seems poised to pull the global economy into a mild recession to tame excess demand for consumer goods and the resulting inflation. But should a recession develop in 2023, Oklahoma will enter that period from a position of strength as the state continues to add jobs and energy prices support the state’s defining industry.”
Petroleum Alliance President Brook A. Simmons said one of the greatest causes for optimism for near-term and longer growth in Oklahoma’s oil and natural gas industry is, ironically, the political efforts to remove oil and natural gas from the nation’s energy portfolio. Driven by President Biden’s actions that cancelled pipelines, halted oil and natural gas exploration on federal lands, and increased the industry’s costs, the production declines that followed have only magnified the need for stable and affordable energy sources.
“Economic growth will require energy,” Simmons said. “With several years of inadequate investment in new production, a catch-up period lies ahead. So, while the potential for a near-term recession causes concern, the medium-term outlook is favorable for the industry and for Oklahoma’s economy.”
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. The OEI is a joint project of The Petroleum Alliance of Oklahoma and Regional Economic Advisers LLC.