US energy companies fear recession

MOSCOW, 28 Sep — PRIME. Top managers of US energy companies fear that a recession could lead to a reduction in demand for oil and gas. This will only complicate matters for an industry already facing supply chain disruptions and rising costs. These are the results of a quarterly survey conducted by the Federal Reserve Bank (FRB) of Dallas.

The index calculated by the Dallas Fed, which reflects the outlook for companies in the energy sector, fell 33 points in the 3rd quarter, to 33.1, while the uncertainty index jumped almost three times, to 35.7. The survey included 163 companies from Texas, New Mexico and Louisiana.

Among the concerns for the energy industry, companies surveyed cite rising interest rates, disruptions in supply chains and accelerating inflation. Another problem is the pressure on the industry from the Joe Biden administration.

“We view the outlook for the sector as positive, but it is becoming more uncertain due to continued monetary and fiscal tightening,” said one respondent.

The index of business activity in the oil and gas sector of the US Southwest remains at high levels, but in the 3rd quarter it fell to 46 from a record 57.7 in the previous quarter, according to the survey results. According to top managers of energy companies, problems with finding new employees and the supply of equipment, as well as rising production costs, hinder the development of activities.

“The main factor that does not allow expanding the business is problems with the availability of equipment and oilfield services,” says one of the top managers. Others point out that labor shortages persist.

According to one respondent, OCTG prices have skyrocketed by 500-600% over the past two to three years.