Oil News Roundup! (Nov 13, 2022)

 In an effort to track the latest news about the oil/energy sector and the future of Houston, I've reviewed articles from the past week. 

In short, it looks as though local oil and gas companies are having extraordinary profitable years due to the impact of the Ukraine war on supplies and their reluctance to invest further.  Also competing views on future energy regulations continue to be a significant political point of contention.


1. The Dallas Fed held an event on energy and the economy.  Of note, are comments that:

  • the oil and gas sector is producing at 60% of pre-pandemic levels
  • oil and gas leaders blame - 
    • labor shortages, 
    • pipeline capacity, 
    • lack of new oil and gas investment (primarily due to environmental pushback),
    • oil company tentativeness to expand given recent busts,
    • ESG benchmarks decoupling "prices and products"
2. Several states have set targets to switch homes to 100% electric heating systems, to reduce reliance on natural gas.  California, in particular, passed a ban of natural gas appliances.  Texas, along with 20 other Republican-led states, have passed bans on those bans.

3. The Biden administration increased Methane leak restrictions, aiming to reduce emissions from oil and gas drilling by 95%.  Most emissions come from lower-producing wells despite providing only 6% of production.  It came with little complaint from the industry, as they greeted a cooperative approach to the proposed regulations.

4. After the "Texas Freeze" in February 2021, the state of Texas started reviews to determine what should be done to prevent a reoccurrence.  The Public Utility Commission, which was tasked with overhauling the Texas power market, is considered which proposal is best.  Diversity of views has been raised, as all 5 Commissioners were appointed by the current Texas governor and the Committee to advise on the redesign have 12 members, all appointees from the same political party.

5. Houston oil and gas employer Phillips 66 staff reductions will exceed 1,100 by year's end (8% reduction).  Their CEO boasted that the reductions occurred "in the two best quarters of our existence."  Similarly, Houston employer Occidental Petroleum's revenues and profits grew 40% and 400%, respectively, in one quarter.  Diamondback energy, an independent oil and gas company, had profits grow by 80% in the same quarter and plans to buy another competing firm.


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