Oklahoma must diversify its economy, decrease dependence on energy

Oklahoma must diversify its economy, decrease dependence on energy
By Scott Meacham
Copyright © 2016, The Oklahoma Publishing Company

Here’s another eye-opening statistic about Oklahoma’s lack of economic diversification.

Our state holds the record for the largest share of total household earnings coming directly from the oil and gas industry — a whopping 13.9 percent (2014 standings reported in October 2015 by RegionTrack).

Not only that. Oklahoma’s standing in this report is the highest share of dependence on the energy sector ever posted by any state in the modern era.

Even more concerning, Oklahoma has a larger share of household earnings coming from oil and gas than we did in 1982 at the very height of the oil boom. We are 50 percent more dependent on energy than Texas.

Last year, I wrote about how Oklahoma ranked 48th (ahead of West Virginia and Mississippi) in the 2014 State New Economy Index. The New Economy Index builds on six prior indexes from 1999 forward and uses 25 indicators to capture what is “new” about the New Economy.

In the 2014 report, from IT jobs to workforce education to fast growing firms, Oklahoma missed the mark. That’s because we aren’t taking the steps that other states — even energy-rich states like Texas — are taking.

If anyone still needs proof of the desperate need to diversify Oklahoma’s economy, here it is. Household earnings here depend on the oil and gas sector more than any other state, and it is getting worse over time. And, gauging our progress against the measures of innovation and preparedness for the New Economy, we are missing the mark by a mile. There’s no denying the facts.

Let’s not allow our over-dependence on oil and gas to stifle innovation in Oklahoma and harm so many Oklahoma families when energy prices are low. Let’s commit to specific actions to improve our state’s ability to meet the challenges of today’s economy instead of pulling back when times get tough. That type of thinking is what has led to our increased dependence on the energy sector.

R&D investment creates an incredible platform for future growth. We have amazing sources of innovation here, including OMRF, OU, TU and OSU. Let’s find ways to help propel more inventions out of our labs and into the hands of entrepreneurs.

We’re continuing to make progress with investment capital for the ideas that emerge from labs and the minds of innovative Oklahomans. A new report from the National Venture Capital Association reports that Oklahoma City has had the second largest rate of growth in the country by number of companies receiving investment since 2010, with a 51.6 percent increase. We need to expand this success statewide and increase our capital sources so there is adequate follow-on funding for our young companies as they begin to grow.

Oklahoma can build a new strategy that aggressively brings diversification and the economic benefits brought by new technologies and economic evolution. We have the reasons. We’ve set the foundation. Now we need to do the work.

Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology (OCAST).