A glut in oil supply will have an impact in Oklahoma

Gluts in the supply of oil and natural gas are expected to continue to keep energy prices low and reduce energy-related employment in Oklahoma throughout 2016, Oklahoma State University economist Dan Rickman said during the 2016 Oklahoma Economic Outlook Conference last week.

He added, though, that some other sectors of the Oklahoma economy will continue to benefit from an expanding national economy.

The conference is hosted each December by the Center for Applied Economic Research in OSU’s Spears School of Business. This year’s conference, held at the Metro Technology Centers at the Springlake Campus in Oklahoma City, included presentations on national, state and local economic conditions; teacher salaries and state budgeting in Oklahoma.

Rickman projects that total nonfarm employment in 2016 will be roughly unchanged from that in 2015. Notable job gains in excess of 2,000 are forecast for the sectors of health care and social assistance, construction, leisure and hospitality and local government.

Over 6,000 fewer jobs are forecast in 2016 in the energy sector compared to the average level in 2015. In addition to the oil and gas sector, other sectors expected to suffer significant job losses are durable goods manufacturing, especially firms producing equipment for the energy sector, and state government. Retail trade employment is forecast to remain relatively unchanged in 2016.

“The recovery in oil prices is likely to be much more U-shaped than V-shaped,” said Rickman, Regents Professor of Economics and Oklahoma Gas and Electric Services Chair in Regional Economic Analysis. “As a high-cost producer, the United States serves the role as a marginal producer, in which the greatest reduction in supply to reduce the energy glut will occur in the U.S.”

Within Oklahoma, Rickman forecasts that growth will be strongest in the Oklahoma City metropolitan area, and will decline in the nonmetropolitan portion of the state.

At the county level, OSU economist Hongbo Wang, assistant director for the Center for Applied Economic Research in the Spears School, spoke on the near-term struggles for the Oklahoma counties that have recently been intensively involved in shale oil and gas development.

Others speaking at the conference included Matt Hendricks, assistant professor of economics in the Henry Kendall College of Arts and Sciences at the University of Tulsa; and Ken Miller, state treasurer for Oklahoma.