More money is coming into the Oklahoma Treasury in large part due to the rebounding energy market.
July gross receipts for 2017 topped the previous year by almost 9 percent, according to Oklahoma Treasurer Ken Miller.
“The body of evidence supporting economic recovery is growing,” Miller said. “Gross receipts show ongoing expansion, as do employment reports and broader measurements, such as the latest state Gross Domestic Product (GDP) release.”
Miller’s office said July receipts from oil and natural gas production generated $41.9 million, an increase of 37.4 percent or $11.4 million from the previous year.
During this time, Oklahoma has seen a 7 percent increase in drilling activity and 1,500 new oil and natural gas industry jobs, together pushing the state’s Energy Index to 168.8 using data collected in June, according to the Oklahoma Independent Petroleum Association.
Consumers have likely noticed an increase in gas prices at the pump.
The national average price of a gallon of gasoline is just under $2.50 and it is rising in 47 states and in Washington D.C., according to AAA.
“As summer moves forward, the days of dropping summer gas prices appear to be behind us for now,” AAA Spokesperson Mark Madeja said. “U.S. crude inventories are moving in the opposite direction of demand — a perfect storm for continued price increases heading into August.”
While Oklahoma is one of the states that saw the biggest increase in gas prices, it still has some of the lowest gas prices in the country. As of July 31, Oklahoma’s averaged $2.09 a gallon for regular unleaded gas.
But those higher prices aren’t likely to stay.
Already, the OIPA said oil and natural gas prices have slumped. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute, said drilling and employment gains offset these decreases.
“The industry struggles to find an operational balance in an improving but not yet fully improved environment,” Evans said. “Oil and natural gas prices have stabilized, but remain at levels that are unlikely to support the full distribution of drilling budgets announced for 2017. Baseline expectations are for the industry to continue a slow recovery through the end of the year, with hopes that further market balancing supports additional growth in the year ahead.”
In the OIPA oil and gas round-up published on Aug. 4, the association reported that rig counts in Oklahoma, which had gone up in July, fell by two to 132 in Oklahoma, by four to 954 nationwide and by seven to 1,171 throughout North America.
That is still much higher than the 61 rigs that were operating in Oklahoma the previous year.
The OIPA round-up referenced a Bloomberg News report about how United States shale producers are once again setting large production targets. This will likely lead to more supply and lower prices per barrel.
Producers are trying to lock in selling prices now when oil prices are favorable before a glut of U.S. shale could drop the price again.
What does that mean for Oklahoma? The Oklahoma Treasury saw an increase in all major revenue streams in July, but growth in gross production collections is driving the shrinking margin between this year’s collections and collections from the previous 12 months.
The state’s unemployment rate has stayed steady at 4.3 percent, just under the national average, but after six months of anticipated economic growth, the Oklahoma Business Conditions Index dropped in July.
“The overall index was set at 49.4 in July, down from 57.7 in June,” according to Miller’s office. “Numbers below 50 indicate anticipated negative growth in the next three to six months. The energy sector continued to bring strength to the index, while slight weakness in the manufacturing sector lowered the overall rate.”
SOURCE: Sidney Lee NormanTranscript.com
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About Oklahoma Minerals Founder GIB KNIGHT
Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.