Oklahoma’s energy recovery is gaining momentum, with the most recent Oklahoma Energy Index (OEI) expanding at its fastest pace in more than a year and industry activity returning to pre-pandemic levels.
“As the U.S. and global economies appear to be slowing, Oklahoma’s economy is growing,” said Dr. Russell Evans, principal and founder of Regional Economic Advisers LLC. “This is particularly important with the prospect of a U.S. recession looming on the 2023 horizon. Gaining strength in core sectors, like oil and natural gas production, will provide a buffer against national economic weakness and may slow Oklahoma’s entry into that economic malaise should it develop.”
The most recent Oklahoma Energy Index rose to 121.7, matching a level last seen in March 2020 with the onset of the pandemic. Four of the five index components increased using data compiled from March, with strong gains in production and support employment and increased oil and natural gas spot prices.
Evans said the most important element of industry strength is job gains. Revisions to pandemic payroll estimates show the industry experience was more muted that initially reported. The sector lost fewer jobs than estimated through the pandemic and then recovered jobs at a more modest pace than estimated. Job gains initiated at the end of 2021 appear to be carrying into 2022 with the industry adding 1,500 payroll exploration and production jobs in the first quarter of the year.
The only Index component lagging is Oklahoma’s rig count, an issue Petroleum Alliance President Brook A. Simmons said is driven by public policy, access to capital and the supply chain issues plaguing the country that have left Oklahoma oil and natural gas producers struggling to find the equipment and workers necessary to put drilling rigs to work in Oklahoma historic oilfields.
“Oklahoma’s oil and natural gas industry is grappling with the same issues businesses across the country are facing,” Simmons said. “Logistics snags have reduced access to steel, pumps and even the pickups needed to carry workers to and from drilling sites. Oklahoma’s rig count is slowly increasing, but until supply issues are solved, it is difficult to forecast a significant increase in drilling activity.”
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.