June 10, 2019
While the Odessa Economic Index stood at an all-time high of 266.9 for March 2019, economist Karr Ingham noted that annualized quarterly growth in the index was only 0.3%. The index flattened in Q1 2019, “almost certainly in quick and direct response to a 40% decline in crude oil prices in the fourth quarter 2018,” leading to slowdown in Permian oil and gas activity, Ingham wrote.
Ingham noted that possible explanations for continued oil and gas activity cooling could have been in response to the Q4 2018 crude oil price drop; that fewer employees are required to raise production; that takeaway capacity continues to be a problem, and that operators might be more reluctant to drill more gas-producing wells.
Still, “There is little to suggest the Odessa economy is likely to change from a growth economy to one of contraction this year,” Ingham said.
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