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'Petro Index' Shows a Healthy Texas Oil and Gas Industry

The digits of gasoline pumps nationwide might bring woe to consumers, but the digits of the Texas Petro Index and the statistics that comprise it herald an era of exceptional growth for Texas oil and gas producers.

The index -- which is composed of oil and gas prices paid to producers, the state's rig count, drilling permits, well completions and the volume and value of Texas oil and gas production, as well as industry employment -- at midyear 2008 stands at 271.4, representing a 17.8% increase from a year ago and a 176.1% increase from the index's base of January 1995. The index is computed by the Texas Alliance of Energy Producers in an effort to put a finger on the pulse of the industry.

Recent milestones include a Texas rig count that surpassed 900, monthly drilling permits exceeding 2,000 and $10 billion of oil and gas production value realized in June alone, as well as month-to-month increases in the Petro Index of five points in May and June.

Year-to-date gas prices in Texas average $8.87, up 31.2% from $6.76 during the year-ago period and up 529.1% from the Petro Index base year of 1995 when the price averaged $1.41.

Gas well completions year to date are 4,958, up 13% from the 4,389 seen a year ago and 149.8% from the 1,985 seen in the index base year.

Gas production volume year to date is up 2.8% from the year-ago period and up 15.9% from the base year. Production value has increased 34.3% from a year ago and 625.1% from the base year.

During a briefing with reporters in Houston last Monday, independent economist Karr Ingham, who compiles the index for the Texas Alliance, said the rewards of increased production and commodity prices do not all fall into producers' pockets as costs to the industry have risen. He said calls to curtail consumption through imposition of increased taxes are misplaced and that the balancing of supply and demand should be left to the market. "There's all manner of ignorance out there about the [energy] industry," he said.

Other noteworthy statistics that comprise the Petro Index are those that track employment in the energy industry. According to Ingham, year-to-date average oil and gas extraction employment is up 6.5% from the year-ago period while oil and gas support employment is up 9.1% from the year-ago period.

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