Dallas Fed: Energy sector mood is good
Oil and gas industry respondents in a survey published June 23 by the Federal Reserve Bank of Dallas relayed a sense of general optimism, but had profound reservations about the energy transition.
A survey of business activity from the Dallas Fed was on the positive side of confidence, but relatively unchanged from the first quarter. On oil and gas production, the survey of executives at upstream companies showed optimism was at a five-year high. On spending, most respondents were more optimistic than they were during the first quarter.
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But on the energy transition, comments submitted to the Dallas Fed showed enthusiasm was less than stellar.
One respondent expressed concern that lawmakers pressing for a clean energy future are not following actions with words. And neither is the general public.
“Can they live without their cellphones, clothes and cars, which rely heavily on oil and gas? No, the public cannot give that up easily,” the respondent said
Others said that some renewable energy forms, such as wind and solar, are not competitive alternatives yet. Meanwhile, the “current political tenor” is condemning the very industry that will help usher in a clean energy future.
“All modelling shows natural gas and oil play an important part in any future energy supply for the country and for the world,” the respondent said. “Our industry should be partners in the ‘greening’ process and be encouraged rather than bashed at all opportunities.”
US president Joe Biden has set a goal of achieving a net-zero economy by 2050, but industry respondents said that goal is unrealistic given the continued need for oil and natural gas.
On markets in general, meanwhile, survey respondents said they expected West Texas Intermediate, the US benchmark for the price of oil, would be at $69.71/barrel by year’s end, about $3/b less than current spot prices.
Henry Hub, the US benchmark for the price of natural gas, is expected to hit $3.10/mn Btu by the end of the year, about $0.30/mn Btu lower than spot prices early in the Thursday session.
The Dallas Fed survey of 152 oil and gas executives was conducted from June 9-17.