FOR IMMEDIATE RELEASE

May 19, 2026

CONTACT: Sarah Dickson

OKLAHOMA CITY - The Oklahoma City Branch of the Federal Reserve Bank of Kansas City released its latest issue of the Oklahoma Economist, titled “Higher Oil Prices May Not Meaningfully Boost Oklahoma’s Broader Economy.” This edition examines how elevated oil prices due to the Iran conflict may affect the state’s economy.

While the outlook depends on the magnitude and duration of the conflict, oil prices may not remain at levels needed for all energy firms to substantially increase drilling, according to Cortney Cowley, assistant vice president and Oklahoma City Branch executive of the Federal Reserve Bank of Kansas City.

“Regional producers have not yet increased drilling on net despite higher prices, as firms have varied price thresholds for substantially increasing drilling and the persistence of the supply shock remains unclear,” she said. “Further, the oil and gas industry requires fewer workers to increase production and exercises greater capital discipline, likely curbing broader employment and investment gains.”

Cowley said Oklahoma's higher concentration in natural gas further limits potential drilling increases, as natural gas prices remain depressed by ample domestic supply and limited export capacity.

“Oklahoma’s drilling revenues are more concentrated in natural gas, where prices are less affected by global developments and are currently decreasing relative to oil prices,” she said. “As a result of lower gas-related revenues, increases in state severance tax collections are likely to be more modest than during previous price shocks.” The complete issue is available at www.kansascityfed.org/oklahomacity/oklahoma-economist.

The Federal Reserve Bank of Kansas City serves the Tenth Federal Reserve District, encompassing the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico. As part of the nation’s central bank, the Bank participates in setting national monetary policy, supervising and regulating numerous commercial banks and bank holding companies, and providing financial services to depository institutions. More information is available online at www.kansascityfed.org.

The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.