Activity and spending in U.S. oil fields is soaring this year as the industry recovers from 2020 pandemic-driven oil price crash, according to optimistic-but-wary energy company executives polled by the Federal Reserve Bank of Dallas in a survey this week.
While improved oil prices have boosted expectations for 2021, executives are cautious about the potential for Biden administration oil and gas policy changes or the threat that the Organization of the Petroleum Exporting Countries and partners could easily return oil to the global market.
“While the price increases have been welcome news, OPEC+ is a sword of Damocles: if U.S. operators raise capital expenditures, OPEC+ will open its taps and flood the market,” one executive said. “There is a tense detente currently.”
More than half of executives said they were not hiring more workers and were concerned about the Biden administration.
“I believe that it is their goal to effectively shut down our industry, and they will pursue that end with great energy,” one executive said.
Survey respondents expect U.S. oil price of $61 per barrel by year-end, around the same level where oil traded on Wednesday.
Companies reported a break-even price $50 per barrel, $1 higher than last year, to drill in the Permian Basin, the top U.S. shale field.