The Federal Reserve Bank of Dallas has released its Q2 2021 Energy Survey, and one thing is clear: oil and gas companies are struggling to find investors.
The new report included special questions about expectations for a global crude oil gap, current and expected investments in renewables by oil and gas firms, and more. Oil and gas executives who responded to the survey noted that this sector “continued to grow strongly” in Q2 2021. However, two comments stood out.
“We have relationships with approximately 400 institutional investors and close relationships with 100. Approximately one is willing to give new capital to oil and gas investment. The story is the same for public companies and international exploration. This underinvestment coupled with steep shale declines will cause prices to rocket in the next two to three years. I don’t think anyone is really prepared for it, but U.S. producers cannot increase capital expenditures: the OPEC+ sword of Damocles still threatens another oil price collapse the instant that large publics announce capital expenditure increases. The inability to access credit from reserve-based lending is a current issue affecting our business.”
“Our biggest fear is the administration’s executive actions. Inflation will cause higher oil prices. That will hurt demand over time. Dollar values will help domestic producers. Our foreign policy looks very weak. That may create issues that invite higher oil prices.”
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These comments were from a survey of respondents whose identities were not mentioned in the report. Another comment mentioned that the Federal Reserve was leaning on banks to address climate change in their lending decisions — something that is not helpful to the oil and gas industry.
Another commenter referred to President Biden’s stance on clean energy as “the current mess in Washington,” and noted that this added an “unacceptable and adolescent level of challenge to strategic planning.” They claimed that the economy is dependent on the oil and gas industry to provide the energy to fuel it.
One executive stated that they have been monitoring potential changes to the tax code that could negatively impact the industry. They noted that they are “especially concerned about the elimination of intangible drilling cost deductions and flow-through entity taxation.”
Source: Clean Technica
