Dallas Fed Survey: Tariffs, Uncertainty Hamstring Energy Production
Traditional energy exploration and production in the U.S. declined slightly in the third quarter, as oil and gas executives reported rising concern about tariffs and trade uncertaintyand decreasing optimism about the state of the industry (, subscription).
Whats going on: 插泭released today by the Federal Reserve Bank of Dallas quotes industry executives who pointed to concerns about various administration policies, from tariffs to energy.
- The survey of 139 energy-firm executives in northern Louisiana, Texas and southern New Mexico found that oil companies were drilling less as the administrations 15% tariff on imported steel required for oil-and-gas infrastructure continued.
- The surveys company index also slipped, from -6.4 in Q2 to -17.6.
Why its important: Oil executives told the Dallas Fed earlier this year that Trumps push to lower fuel prices, which lessens the economic incentive for producers to drill, was incompatible with his stated desire to increase production.
- Tariffs on many imported goods have increased the cost of drilling at a time when producers are struggling with an oversupplied market, sluggish demand and weak prices.
What theyre saying: Tariffs are increasing our supply costs, said one oil-and-gas support services firm executive.
- The administration is pushing for $40 per barrel crude oil, and with tariffs on foreign tubular goods, [input] prices are up, and drilling is going to disappear, an exploration and production company leader said in his survey response. The oil industry is once again going to lose valuable employees.
- Said another: The uncertainty from the administrations policies has put a damper on all investment in the oilpatch.Those who can are running for the exits.
