Representatives of the fossil fuels industry told the Dallas Fed that prices were on the rise and cash flow was on the decline. File photo by Gary C. Caskey/UPI | License Photo
March 29 (UPI) -- Growth in the oil and gas sector is on the decline relative to previous years, with respondents to an energy survey for the Federal Reserve Bank of Dallas published Wednesday saying there's still work to do to dampen inflationary strains.
The Dallas Fed said in its energy survey for the first quarter that "growth in the oil and gas sector has stalled out." For the ninth quarter in a row, firms responding to the survey said rising costs were an impediment.
"Inflation pressures appear to be moderating slightly, but we still have a long way to go," one respondent said.
Inflation continues to run at about three times above the target rate of 2% set by the U.S. Federal Reserve. Wholesale prices are on the decline, though the Fed last week opted to increase its lending rates to slow the economy down.
A representative from the exploration and production side of the energy sector pointed to lingering inflationary pressures as a detriment to its project economies. In response to the start of an oil and gas auction in the Gulf of Mexico, meanwhile, Bob McNally, the head of the Rapidan Energy Group, said economic concerns were impacting the broader energy outlook.
"The main reason oil investors are and have been reluctant to invest -- I would say 80% of it, has to do with these fundamental issues," he told CNN.
For the Dallas Fed, it was concerns and worries about the health of the global economy that were among the major worries for executives. One respondent said there's been a cost increase of as much as 40% for some of its operations, which coupled with lower commodity prices, has "produced a noticeable lower cash flow."
On prices, the survey average was $79.64 per barrel of West Texas Intermediate, the U.S. benchmark for the price of oil, by year's end. Prices averaged $68.51 during the survey period -- from March 15-23 -- though WTI was in the $73 range in Wednesday trading.
Concerns were reflected across both the manufacturing and services sector in the Dallas Fed's district.
"We are holding steady at current revenue," a respondent from the manufacturing sector said. "However, there are many uncertainties that are causing us to be extremely cautious."