HOUSTON, Jan. 27 (UPI) -- Though oil production continues to withstand weaker prices, the environment in the Texas oil and gas sector is in decline, an economist said.
"We've not begun the year moving in the right direction, and the continued deterioration of market conditions likely signals additional industry downsizing and job loss in the coming months," Karr Ingham, an economist who created the Texas Petro Index, said in a statement.
The TPI, compiled for the Texas Alliance of Energy Producers, is used as an indicator to gauge the health of the state's energy sector. Ingham said it's "quite safe" to assume a downward trajectory will persist for the upstream, or exploration and production, side of the Texas energy sector.
Ingham estimated the number of rigs in service in the upstream sector is down by about 68 percent from peak levels in 2014, when crude oil was priced more than $100 per barrel. Last week, the state-wide rig count fell below 300 for the first time in more than 15 years.
This steep drop in upstream activity has lead many in the industry to cut jobs. As of December, around 246,000 people were employed in the sector, down close to 20 percent year-on-year.
Ingham said supply-side pressures will last for crude oil prices as the steep decline has yet to impact output substantially. Crude oil production in Texas last year outpaced the previous year by 11.5 percent, with each month of the year in 2015 eclipsing the output from the same month in 2014.
Nevertheless, he said resilience may be short-lived and some form of energy sector recovery should emerge in 2016, but "in the big picture, crude supplies continue to outpace global demand, and the unfortunate likely outcome is relatively low prices in 2016."
Tax revenues for the state from the energy sector are down by about 50 percent from 2014, a review from the U.S. Energy Information Administration found. State data from November, the last full month for which data are available, show the seasonally adjusted rate of employment increased 0.2 percent from October to 4.6 percent. The national rate is around 5 percent.