Texas Petro Index June 2020

Friday, July 31, 2020 9:36 AM | Texas Energy Advocates Coalition (TEAC) (Administrator)

“Petroleum energy demand dropped off the cliff sharply and rapidly at the same time crude oil production was peaking, particularly in Texas and the U.S.,” said Karr Ingham, Petroleum Economist for the Texas Alliance of Energy Producers and the creator of the monthly statewide upstream activity index. “That would have been bad enough; throw in a market share temper tantrum between Saudi Arabia and Russia at the worst possible time, and you have a thoroughly devastating impact on energy markets.”

The Texas Petro Index

The composite index was based at 100.0 in January of 1995. That base number tracks growth or decline in Texas oil and gas exploration and production. The Texas Petro Index tracks specifically:

  • Crude oil posted price

  • Natural gas price

  • Rig count

  • Drilling permits

  • Crude oil well completions

  • Natural gas well completions

  • Crude oil production volume

  • Crude oil production value

  • Natural gas production volume 

  • Natural gas production value

  • Total oil and gas employment

  • Oil and gas extraction employment

  • Oil and gas support Employment

Gasoline demand on the rise

The COVID-19 pandemic caused a drop across the board. However, the industry was already in a state of contraction for a full year prior to the pandemic, but production itself continued to climb. It had just started to slow when COVID-19 hit. 

After falling below zero, crude prices have come back and are continuing to hover around the $40 mark. Likewise, U.S. gasoline demand has recovered, but not to pre-COVID levels. It is unlikely to see those levels again for a long time. Jet and diesel fuel have seen less of a recovery. With the future of travel still up in the air, so to speak, it could be a long time before demand for either of them shows any significant rise.

Production is still falling even as demand is increasing. This is a good sign for recovery. It shows the debate over prorationing to now be truly moot. The Texas Railroad Commission was looking at implementing a 10% reduction in production, but we have now gone well beyond that. Without any help or mandates by the RRC, production decreased 13% in three months.

Industry employment losses

The industry was already losing employees in 2019, well before COVID, but since March those numbers completely dropped. It could be three months or more before the unemployment levels bottom out. From December 2018 through June 2020, there were 66,150 Texas upstream oil and gas jobs lost. Of those, February through June of this year saw 46,100 of those lost jobs.

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