Dallas Fed Survey Of Oil Executives Suggests Biden Is ‘Holding Us Back’

Authored by Andrew Moran via The Epoch Times (emphasis ours),

U.S. oil and gas sector activity advanced at a strong pace, although the rate of expansion decelerated in the third quarter, according to the Federal Reserve Bank of Dallas Energy Survey for the third quarter.

The business activity index, a measurement of conditions facing energy companies in the region, fell to 46.0 in the July-to-September period from the second quarter’s record of 57.7.

Executives at exploration and production (E&P) firms noted that crude oil and natural gas production increased at a solid rate of 31.7 and 35.6, respectively.

Costs continue to remain elevated for the seventh consecutive quarter as the index for input costs clocked in at 83.9. None of the 58 oilfield services firms that participated in the regional central bank’s quarterly survey recorded a drop in input costs. In addition, the indexes for finding and development costs and lease operating expenses for E&P entities eased slightly to 64.7 and 70.2, respectively.

“Oilfield service inflation has increased, uncertainty has increased and oil prices have decreased. This is a recipe for lower to flat industry spending in 2023,” one E&P executive stated.

Supply chain disruptions and labor shortages continue to be enormous challenges for the oil and gas industry. Supplier delivery times still lagged and remained above the industry average. While there was robust growth in employment, wages, and hours executives noted that it’s difficult to attract talent.

Businesses are struggling to obtain critical parts for hydraulic fracturing, drilling rigs, and other crucial tools. But executives revealed that they also find it hard to hire oilfield service workers and truckers amid limited worker availability.

“The labor issue will provide a restraint on any major increase in oil and gas production for the domestic market―this, as well as the regulations from the present administration as they chase green energy policy,” an E&P executive remarked in the report.

“The biggest challenge for us is adding employees. We are trying to add qualified staff, with little success, and that will negatively impact growth. Second is the rising cost of services,” another executive noted.

Overall, optimism diminished last quarter, with the outlook uncertainty index soaring to 35.7 from 12.4. At the same time, there was a divergence of uncertainty among oilfield services firms and E&P organizations: 17.8 compared to 45.2.

“The uncertainty over future inflation and/or a recession weighs heavily upon us,” one E&P executive commented in the survey.

But one oil and gas support services firm executive suggested that President Joe Biden and his administration are against the energy industry.

“The administration is holding us back, with no love of oil,” the person said.

When it comes to crude oil and natural gas prices, opinions were mixed. Some suggest that White House policies and a paucity of capital for E&P firms could be “wonderful news for long-term prices.” Others contend that global economic uncertainty and recession fears could send prices lower.

According to data from the Energy Information Administration (EIA), crude oil production remains approximately 1 million barrels below the pre-pandemic level of 13.1 million barrels. Overall, domestic crude output is expected to average roughly 11.9 million barrels in 2022.

‘Phasing Out the Use of Oil’

This week, the Biden administration proposed new rules on the national oil and gas sector.

The Interior Department’s Bureau of Land Management (BLM) released a proposal on Monday that imposes monthly limitations on gas flaring on federal lands. If companies are caught exceeding those limits, they will be charged fees. The measure, which regulators say would prevent waste and boost efficiency, also mandates energy firms to improve the detection of methane leaks.

“This proposed rule will bring our regulations in line with technological advances that industry has made in the decades since the BLM’s rules were first put in place, while providing a fair return to taxpayers,” said Interior Secretary Deb Haaland in a statement.

Critics assert that this is another example of the administration’s war on the oil and gas industry. But John Kirby, the National Security Council Coordinator for Strategic Communications, pushed back against some of these criticisms.

“The president has issued 9,000 permits for drilling on U.S. federal lands … 9,000 of them being unused. There are plenty of opportunities for oil and gas companies to drill here in the United States,” he told reporters during a White House press briefing on Monday.

However, Amos Hochstein, the Special Envoy and Coordinator for International Energy Affairs and top Biden energy advisor, told CNBC on Wednesday that “we’re going to be phasing out the use of oil.”

On Nov. 26, the Treasury Department announced that it would permit Chevron to resume pumping crude from Venezuela’s oil fields. One of the world’s largest energy companies will be allowed to extract oil in a joint partnership with the national oil firm, Petróleos de Venezuela.

Since the 2020 presidential election, Biden has vowed to end the fossil fuel industry, announcing in November 2020 that his administration would be “banning new oil and gas permitting on public lands and waters” to stop climate change.

Speaking at a campaign event in New York for Gov. Kathy Hochul, President Biden told a climate protester that “there is no more drilling. I haven’t formed any new drilling.”