Natural gas and oil exploration and development in Texas continued to decline through March for the fifth consecutive month, sustaining a trend that may lead to severe job losses in the state and ultimately skyrocketing energy prices, energy economist Karr Ingham said Monday.

Ingham based his findings on the Texas PetroIndex (TPI), which he created. The TPI dipped to 258.7 in March, down from 264.6 in February. The index in March remained slightly ahead of the year-ago index at 0.4%, but is “poised to post a year-over-year negative in April,” said the economist. A composite index based upon a comprehensive group of upstream economic indicators, the TPI peaked last September and October at 285.4.

“Five months into this cycle, deep negatives in oil and gas wellhead prices, the rig count, drilling permits and production values suggest that the current recessionary trend will continue to pick up steam in the coming months,” Ingham said. “Considering the depth and rapidity of the slowdown, there’s no reason to believe it will be shorter than the past two economic cycles chronicled by the TPI. That places recovery well into 2010, even assuming a rebound in the U.S economy later this year and the resulting increase in demand for energy products.”

The first Texas oil and gas industry downturn recorded by the TPI lasted 19 months, from November 1997 through June 1999. The second slump lasted about a year, from August 2001 until August 2002.

Employment in the state’s oil and gas industry remained relatively strong during March, with about 226,000 employed. Texas oil and gas industry jobs peaked last December at more than 240,000. Similarly, Texas wells produced about 34.7 million bbl of crude oil during March, up about 1.5% compared with March 2008, and about 619 Bcf of natural gas, a 1.9% decline from a year ago. In March 2008 gas production in the state jumped 10% from March 2007.

“As the downward cycle picks up steam in the coming months, it will not be possible for the industry to escape without losing a significant number of jobs,” Ingham said. “Ultimately Texas oil and gas production will decline, possibly curtailing energy supplies just as demand is beginning to respond to economic recovery. In such a scenario, at that point energy prices may well skyrocket.”

Indicators Ingham used for the latest TPI included the following:

The TPI is a service of the Texas Alliance of Energy Producers, the nation’s largest state association of independent oil and gas producers.

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