Recent studies by the Oklahoma Energy Index suggests there is a mini “boom” taking place in Oklahoma’s oil and natural gas industry. Oklahoma oil production bounced back from a steady decline from 2015 to a record high in late 2017. A trend which rapidly continued through 2018 into 2019.
This means good news for the industry, although overall jobs still remain lower than their previous peaks. In this article we’ll assess the data behind this recent growth in the industry and assess its implications.
Oklahoma Oil and Gas employment and production
USA Oil and Gas employment and production
In both Oklahoma and the United States. oil and gas production is now more than 10 percent higher than its previous peak in 2015.
Oklahoma particularly is enjoying a period of exception revenue growth, Over the 12-month period, Oklahoma oil production averaged 17 million barrels, some of the highest its ever seen. Much of the revenue also comes from rising oil and gas prices.
Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said that “Activity seemed poised to turn to ‘slow and steady’ by early 2018, but stronger than expected global growth and geopolitical disruptions to supply have sent prices and production higher,”.
The result has seen an incredible increase in state tax revenue for Oklahoma. Gross production tax revenues to the General Revenue Fund at 132 percent above the previous year. The increase in the initial tax rate on gross production from 2 to 5 percent accounts for a considerable amount of this increase in tax revenues. Some in the industry warned lawmakers this tax increase would harm production damage the industry, but this does not appear to be the case.
Whilst employment looks set to increase, it seems unlikely that it will reach its former peak due to improvements in technology. Levels of production per worker have increased massively in recent years due to some key enhancements such as multiwell pad drilling, walking rig systems and a focus on data analytics to improve drilling accuracy and efficiency.