This opinion piece presents the opinions of the author.
As 2014 comes to a close, the oil and gas industry in Texas faces many challenges but none bigger than the decline in the price of crude oil and the failure of natural gas prices to rebound.
The Texas Petro Index increased month after month in 2014, setting a new record each month until November when the slide in oil prices began.
The TPI expanded for 58 consecutive months reaching a high of 312.9 in October.
“The decline of the TPI from October to November likely marks the high point of the expansion of the upstream oil and gas economy that began in December 2009 and signals the onset of a significant cyclical contraction,” said Karr Ingham, the economist who created the TPI and updates it monthly. “If October stands as the peak in that cycle--and there is every reason to believe it will--the expansion in Texas upstream oil and gas activity will have lasted 58 months--nearly five full years.”
During that time, Ingham added, the TPI increased about 66 percent from 188.4.
While the statewide rig count in Texas remained strong through November, averaging more than 900 for the month, Ingham noted that 1,508 drilling permits were by Texas operators in November, less than half the record 3.046 permits filings in October, as well as the fewest permits sought in a month since December 2012 and the second-fewest since January 2011.
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