Survey shows oil industry's view on trade tariffs, future plans

By Luke Geiver | October 21, 2019

A recently released survey of energy executives and professionals working in the states of Colorado, Wyoming, New Mexico and Oklahoma reveals how the oil and gas sector views the trade tariff dispute between the U.S. and China. The Federal Reserve Bank of Kansas City’s third quarter Energy Survey asked respondents how trade tariffs have impacted business. 

“I believe oil is a couple dollars a barrel lower than it would be without trade tensions,” one respondent said. 

According to the survey results, around 70 percent of firms believed there were slightly or significantly negative effects from trade tensions on their business in the past year. The survey also indicated that a similar share anticipated negative effects from trade policy on their business in 2020.

Chad Wilkerson, Oklahoma City Branch executive and economist, said that activity has decreased in the Tenth District and expectations for the future are unclear. “Firms indicated the level of energy prices was the main constraint on their activity and plans,” he said. “The average profitable price for oil and gas rose slightly in Q3 and was similar to recent and expected oil prices, while natural gas prices remained below profitable levels.” 

Survey results reveal changes in several indicators of energy activity, including drilling, capital spending, and employment. Firms also indicate projections for oil and gas prices. All results are diffusion indexes—the percentage of firms indicating increases minus the percentage of firms indicating decreases. A summary of the first quarter survey is attached. Results from past surveys and release dates for future surveys can be found at https://www.kansascityfed.org/research/indicatorsdata/energy.