HOUSTON (AP) — The number of rigs exploring for oil and natural gas in the U.S. declined by 9 this week to 480, a record low and another sign of the continuing economic woes in the oil and gas industry.
The number of rigs seeking oil was at 386 while 94 explored for natural gas, Houston-based oilfield services company Baker Hughes Inc. said Friday.
A year ago, 1,125 rigs were active. At the recent boom’s height, the count had climbed to 1,931 in September 2014. But it has steadily fallen since then as oil prices plunged to about $30 per barrel, well below the $100 per barrel just two years ago.
The rig count is seen as an important indicator of the strength and stability of energy prices and the health of the oil and gas industry. The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999.
In the latest count, there were only 386 rigs in the U.S. looking for oil and 215 of those were in Texas, said Patrick Jankowski, regional economist and vice president of research at the Greater Houston Partnership, a local business group.
“That is absolutely incredible,” he said. “Here we are the big oil state and we only have 215 rigs working. That just shows you how hard the industry has contracted.”
Among the major oil- and gas-producing states, Texas lost 12 rigs, Oklahoma lost three, New Mexico lost two and North Dakota and Ohio lost one. Louisiana and Pennsylvania each gained three rigs, Kansas gained two and California and Utah each gained one. Alaska, Arkansas, Colorado, West Virginia and Wyoming all were unchanged.
Houston — home to more than 5,000 energy-related firms and nicknamed the energy capital of the world — has taken an economic hit during this latest oil downturn. About 50,000 industry workers were laid off in 2015, and another 21,000 layoffs are projected for this year, Jankowski said.
The drop in the rig count can be used to gauge the job losses across the country, said Ed Hirs, an energy economist with the University of Houston.
“It’s a marker because each rig generally employs about 100 workers. So you can take the diminished rig count, multiply by a 100 and you get an idea of the direct loss of jobs in the industry.” Hirs said.
However, the new low is likely a sign that oil production will finally drop, leading to some stability in prices, Jankowski said.
“There is an old joke out there. The remedy for low oil prices are low oil prices,” he said. “It’s inevitable that oil prices go up. It’s a question of whether they go up in the next six weeks or the next six months.”