Economists predict that Oklahoma will continue to feel the burn of low oil and natural gas prices for much of 2016.
Inventories of oil and natural gas remain high, and production has not slowed sufficiently to help raise prices, said Oklahoma State University economist Dan Rickman.
Rickman predicts that Oklahoma will continue to shed energy sector jobs, and that oil and gas prices will continue to decline until well into the second half of 2016.
Rickman spoke Tuesday at the 2016 Oklahoma Economic Outlook Conference at the Metro Technology Centers Springlake campus in Oklahoma City.
“2016 is going to be a fairly flat year for the Oklahoma economy,” Rickman said. “We need the energy sector to hit bottom before that turns around.”
While oil and gas companies have slowed drilling new wells, production on existing wells remains high, he said.
“We are still producing more than twice as much oil as we were in the year 2000, and the adjustment has not been sufficient to increase prices,” Rickman said.
More lost jobs in 2016?
Rickman predicts Oklahoma could shed as many as 6,100 jobs in 2016 in the mining sector, which is mostly energy-related jobs. The decline represents roughly a 11 percent decline in energy sector jobs for the state.
Jim Huntzinger, executive vice president and chief investment officer for BOK Financial Corp., spoke at the conference about the state of the national economy. Huntzinger predicted continued slow but stable economic growth.
Huntzinger forecast the nation’s gross domestic product to grow next year at a roughly 2 percent rate, consistent with the past few years.
Low oil and gas prices will have a chilling effect on the equity markets as a whole in 2016, Huntzinger said.
Lower energy prices could prove fatal to oil and gas producer with a heavy debt load, while stronger companies could look to acquire competitors during the price depression, he said.
“it’s going to be touch and go for some energy companies for a while,” he said. “Some companies won’t make it.”