Energy index takes another hard fall
Oklahoma's energy industry continues to be hammered as the C OVID -19 pandemic continues.
An energy index published on a monthly basis by the Oklahoma Petroleum Alliance and partners shows the industry in the midst of a bust “of historic significance,” officials said Friday.
“Unfortunately, it is increasingly difficult to see a quick path to a bottom and even more difficult to see a robust recovery in the near future,” said Russell Evans, executive director of the Steve nC. Agee Economic Research and Policy Institute at Oklahoma City University.
The index uses May 2000 (which was assigned an index number of 100) as a base period to compare against monthly reading so frig counts, energy employment levels for production and support companies and monthly average spot prices for natural
gas and oil.
The index number for May 2020 was 95.6, off 5.6% from its April 2020 reading of 101.3.
“The industry is shedding jobs with new activity on hold,” Brook A. Simmons, the alliance's president, stated as part of the index announcement made Friday.
“It could be months until operators can identify an economic and price path
forward in which they can have confidence. In the meantime, activity likely will stay muted while companies cut jobs, assets and costs to better align (operations) with limited cash flow,” Simmons said.
The alliance and Oklahoma City University partnered with Bit co Insurance to create the latest monthly energy index.
Crystal L aux, south regional manager with Bitco, stated as part of the index release that hopes are facing that the pandemic-caused broad recession will go away anytime
soon.
“Even without the current widespread increase in positive cases, the economic damage already incurred would take years to fully undo ,” Laux said.
“The unfortunate reality for Oklahoma's oil and natural gas industry is that the U.S. recession is just beginning. It will be months, at least, before the economy is firmly on the path to economic recovery, pulling with it demand for energy sufficient to provide prices that will support Oklahoma activity once again ,” Laux said.