Texas oil and gas producers could begin to curtail drilling in the Lone Star State as falling crude oil prices are feeding anxiety over another economic slowdown, according to a new Texas Alliance of Energy Producers report.
Average crude oil prices in Texas dropped in April for the first time since October 2009, but production rose more than 8 percent over last year to 41.75 million barrels of crude oil.
Economist Karr Ingham said crude oil prices are being weighed down by the European debt woes, economic slowdown in Asia and the sluggish U.S. economy. Those concerns are fueling an uncertainty about future crude oil pricing.
“Producers don’t have a solid sense about where the bottom may be, and that is making them a bit gun-shy and, perhaps, trigger-happy to curtail exploration and development drilling,” Ingham said.
The report does have some good news about the Lone Star State.
Texas Workforce Commission estimates 249,000 people are working on oil and gas industry payrolls, which is nearly a 15 percent rise over April 2011. The number of rigs also rose to 923, a 17 percent rise over last year.
Lower natural gas prices have caused the value of Texas-produced gas to dip more than 55 percent to $1.19 billion in April 2011.
“So even though some indicators continued to increase through April, it is certainly possible we’re on the cusp of a slowdown in upstream oil and gas activity,” Ingham wrote.
Crude oil prices were rising steadily through April before beginning a slow, steady dive in May.