US oil executives fear recession and continued supply shortages – Dallas Fed survey

Content of the article

U.S. energy executives fear an economic downturn could reduce demand for oil and gas, complicating an industry already plagued by supply chain issues and rising costs, according to a report. survey released Wednesday by the Federal Reserve Bank of Dallas.

The Fed’s Business Outlook Index fell 33 points in the quarter to 33.1, while its Uncertainty Index nearly tripled to 35.7, according to the survey, which surveyed 163 companies. of Texas, New Mexico and Louisiana.

Content of the article

U.S. crude is expected to fall to $89 a barrel by the end of the year, survey respondents said, down from an earlier forecast of $108 a barrel. Benchmark U.S. crude West Texas Intermediate was trading around $80.90 a barrel on Wednesday.

Executives said challenges included higher interest rates, supply chain issues and inflation, and what they see as animosity towards the energy sector by the administration of President Joe Biden.

“Our outlook remains positive, but is becoming more uncertain given continued monetary and fiscal tightening coupled with lingering inflationary pressures,” one executive said.

The activity index remained strong, but fell to 46 from a record 57.7 in the previous quarter, according to the survey. Executives said the search for workers and supplies, as well as rising input costs, have hampered their ability to expand their businesses.

Content of the article

« Availability of services and supplies is the biggest constraint to expanding my business, » said one executive. Others indicated that labor shortages were a persistent problem.

An unnamed executive said the price of tubular products – pipes for drilling and transportation – had risen 500% to 600% from two or three years ago.

In a special questions section of the survey, some 54% of respondents said they did not expect carbon capture and storage projects to become profitable following an increase in related tax credits. in the Inflation Reduction Act of 2022.

The survey was conducted between September 14 and 22 and included 105 exploration and production companies and 58 petroleum service providers. (Reporting by Liz Hampton in Denver; Editing by David Gregorio)


Back to top button