Oil production record set

Oklahoma produced 16.8M barrels of crude in March

When it comes to producing oil, Oklahoma’s leaner oil and gas companies are doing more of it than ever.

The state produced a record 16.8 million barrels of crude in March, besting its previous high of about 16.4 million set in January, data from the U.S. Energy Information Administration shows.

The state also continues to slowly add to its count of active drilling rigs. Baker Hughes reported Friday there were 142 rigs operating in Oklahoma — the first time that many have been active at one time in more than three years.

The last weekly count where the state had more than 140 rigs operating was on Feb. 27, 2015, when 146 were working.

Economists said Friday they doubt Oklahomans will ever see the state’s rig count return to a recent high it set of 215 in September 2014.

But they did express optimism that the segment of Oklahoma’s economy that includes oil and gas will continue to improve, barring any sudden change in global supply and demand metrics.

“Oil is an international commodity,” Robert Dauffenbach, director of the Center for Economic and Management Research at the University of Oklahoma’s Price College of Business, said Friday.

“We’ve seen a more synchronized international growth pattern than we’ve had in quite a spell,” Dauffenbach noted, adding, “certainly, we have seen growing in international wealth, too, and a lot of these developing countries are rising in per capita income and increasing their demands for oil.”

Plus, he said the nation’s oil economy has continued to benefit from decisions other major oil-producing nations previously made to curtail production to support the commodity’s global price.

“The Saudis initially tried to kill shale oil, but they found out

contributions to Oklahoma’s 2017 GDP growth came from the mining, quarrying and oil and gas extraction sector, with mining making “notable” contributions, while the government and government enterprises sector was the largest detractor from growth. The former contributed more to Oklahoma’s percent increase in GDP in the fourth quarter than to any other state’s, the bureau said.

Wilkerson said that when the oil and gas sector declines, it also typically leads to a decline in related industries like manufacturing, trucking and even hotels, which house energy workers. But when oil and gas prices rise, it “pulls other sectors up with it.”

Dauffenbach also said that higher prices in the energy sector are favorable for economic growth in Oklahoma.

“I’m quite optimistic about continuing growth,” he said. “There’s no recession in sight, and indeed we have the promise that tax decreases are kicking in and making some difference.”

Personal income declines

In 2016, though, Okla- homa was one of only eight states in which real personal income declined. Real state personal income decreased by 2.7 percent in Oklahoma in 2016, lagging behind the U.S. average of a 1.1 percent increase, the bureau said in a different report.

The Oklahoma City metropolitan area experienced a 0.6 percent decrease in real personal income, the bureau said, which is still below the U.S. average but more positive than the rest of Oklahoma.

Wilkerson said a downturn in energy typically affects workers on rigs first, so there is a delayed “hit” on the city that may explain this. The longer-term trend of stronger population growth in Oklahoma City than in non-metro areas is also a factor, he said.

Real personal income is determined by dividing the total personal income of a region by its regional price parity, then deflating by the U.S. personal consumption expenditures price index. This allows real personal income to be compared across states. Regional Price Parity is based on the prices of goods that consumers typically purchase and rents in an area.

In 2016, Oklahoma had the seventh lowest regional price parity at 89.0, 11 percent below the national level. It also had the sixth lowest rents with an index of 70.1 compared to the U.S. average of 101.2, the bureau said. The Oklahoma City metropolitan area had a real price parity of 91.6.