Oil still has an outsized influence on Oklahoma’s economy, and the outlook for 2021 is less than inspiring.
Oil and Gas Journal forecasts an 8% increase in domestic oil consumption as the U.S. economy is expected to grow 5%. Oil demand fell 12% in 2020, however, as the COVID-19 pandemic took hold.
"The total oil demand will not be fully recovered this year. But next year, it’s expected to be fully recovered, next year," said Oil and Gas Journal Managing Editor of Economics Conglin Xu.
Xu projects a 2% decline in U.S. oil production in 2021, following a 7% decline last year. That drop off will happen even as energy companies drill new wells.
"Although rig count will continue to grow in the first quarter, but U.S. crude production actually is declining," Xu said.
Xu does not believe President Joe Biden’s suspension of oil and gas leasing on federal lands will affect short-term oil prices. Around 25% of U.S. oil production is tied to federal lands and waters, but very little Oklahoma oil production happens on federal lands.
Of bigger concern for Oklahoma is a projected 25% decline in production this year from companies that filed for bankruptcy in 2019 or 2020.