Oklahoma Energy Index Continues Steep Decline
As expected, the Oklahoma Energy Index contracted sharply in April. Oil and natural gas activity fell by 14.3 percent to an index reading of 102.8 – just above the baseline of 100 indexed to the base year of 2000. Total energy activity in the state is now down 44 percent from a year ago with the pace of decline accelerating into the deepest contraction in the last 20 years.
All index components were down again in April. Rig activity fell by 43 percent with April’s weekly rig counts averaging only 25. Rig activity continued to fall into May with new drilling all but halted in the state.
Oil prices fell precipitously in April before out right collapsing in May to headlines of negative prices. Many of the headlines were driven by expiring futures contracts and an unwillingness to accept physical delivery of the commodity, but the underlying weakness in energy demand is real. Most important, energy sector job losses mounted in April with primary exploration and production employment down 7.6% and support employment down 6.1 percent. Job losses will continue in the months ahead as drilling budgets continue to be slashed and producers shift into a production holding pattern.
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