DALLAS (PRESS RELEASE) — The following is a press release from the Federal Reserve Bank of Dallas:
Solid oil and gas sector growth continued in third quarter 2021, according to oil and gas executives responding to the Dallas Fed Energy Survey.
“Business activity grew at a solid clip this quarter, and survey responses generally pointed to continued improvement in the sector,” said Michael Plante, Dallas Fed senior research economist. “However, cost pressures have been increasing, with many firms reporting rising input and labor costs.” [Download Audio Quote from Michael Plante]
Additional key takeaways from this quarter’s survey:
- The business activity index came in at 44.3, pointing to strong overall growth.
- Oil production grew this quarter, but the pace of expansion slowed notably. The oil production index came in at 10.7 versus 35.0 in the prior quarter.
- The input cost index reached another record high, 60.8, breaking last quarter’s record 56.0 reading.
- Expectations for natural gas prices have risen sharply. On average, respondents expect Henry Hub spot prices to exceed $4.70 per million British thermal units (MMBtu) by year-end, up from $3.10 in the last survey.
Firms report problems finding workers over the past quarter
In a series of special questions, firms were asked about expectations for U.S. electric vehicle sales, purchases of carbon credits and/or carbon offsets, COVID-19-related operational delays and hiring challenges.
“Finding workers has been an issue throughout the economy, and the oil and gas sector is no exception,” Plante said. “Among oilfield service firms, a little more than half reported difficulty hiring workers in the third quarter. A lack of qualified applicants was the most frequently selected reason for these difficulties.” [Download Audio Quote from Michael Plante]
Additional key takeaways from this quarter’s special questions results:
- Executives expect EV sales to pick up by the end of this decade; the most-selected response was that 10-19 percent of all U.S. new-vehicle sales will be plug-in electric by 2030.
- The use of carbon offsets and/or credits is fairly limited among respondents. Only 3 percent report purchasing them while another 10 percent are thinking about doing so in the future.
- COVID-19 related work disruptions were widespread but usually minor. Fifty-three percent of executives reported minor operational delays or disruptions; another 17 percent significant delays or disruptions.
The survey samples oil and gas companies headquartered in the Eleventh Federal Reserve District—Texas, southern New Mexico and northern Louisiana. Many have national and global operations.
Data were collected Sept. 15–23, and 142 energy firms responded. Of the respondents, 95 were exploration and production firms, and 47 were oilfield services firms. For more information, visit DallasFed.org.
(Press release from the Federal Reserve Bank of Dallas)