Woodward, Okla. —
WHAT DOES THE ENERGY INDEX NUMBER MEAN?
The 6 different indicators are assigned different values which are then totaled to provide the current index reading, which for Dec. 2013 stood at 235.32. This total index value is in itself arbitrary, Evans said.
Bannister said this means "you can't just look at the one number and say if it's good or bad."
It is in comparing the OEI value with historical data that the index number has meaning, both men said.
"It is an arbitrary value that is set back to Jan. 2000 levels, with Jan. 2000 being set arbitrarily at a value of 100," he said. "So the 235 number is strictly interpreted as 235 minus 100, which equals 135, meaning conditions now are about 135 percent above their levels in 2000."
However, Evans said that more important than knowing how the current number compares to the baseline period of Jan. 2000, will be seeing how the index number continues to change in the coming months.
"What we're really interested in the index is the movement in value from month to month; we're interested in the percent change in the index and knowing is it growing, is it going up or down," he said.
Bannister said officials at OIPA are excited to say that the most recent numbers seem to indicate that the industry is showing some small growth.
According to an OIPA press release, the December index value showed a 1.76 increase over November activity numbers.
"The increase represents the largest single monthly increase since April 2011. More significantly, all 6 indicators trended positively in December for only the third time in the last 18 months," the press release states.
In particular, the indicators for natural gas and crude oil prices saw significant month to month increases, with December seeing a 60 cent, or 16.5 percent, increase for average natural gas prices and a $3.77, or 4 percent, increase in average crude oil prices. However, the press release notes that these price increases "are largely reflective of short-term fluctuations in market conditions, such as an increase in natural gas demand attributed to colder winter weather."