### Uncertainty in the Oil and Gas Industry: Dallas Fed Survey Insights
The latest Dallas Fed Energy Survey reveals a concerning trend of escalating uncertainty among oil and gas firms, while exploration and production (E&P) spending plans remain relatively stable. This mixed signal underscores the complexities facing the industry as it navigates a volatile economic landscape and prepares for the upcoming presidential election.
#### Business Activity Index Ticks Down
The Dallas Fed Energy Survey collected responses from roughly 140 E&P and service-firm executives in mid-September. The headline index of business activity in the survey’s footprint, which includes parts of New Mexico, Louisiana, and Texas, plummeted to -5.9 from 12.5 in the second quarter. This significant decline reflects a broader diminishment in oil and gas activity, with the business activity index now below the near-zero reading observed early this year.
#### Rising Uncertainty
Executive sentiment regarding uncertainty has significantly intensified. A staggering 57% of respondents admitted to increased uncertainty, while only 9% indicated the opposite. This imbalance has more than doubled from the second quarter and is now at its highest since early 2023. The heightened uncertainty is attributed to both economic conditions and the upcoming presidential election, leading many executives to delay investment decisions. One respondent noted, “Recent volatility has started to impact planning discussions for 2025. We have not adjusted our plan yet, but we are starting to work on potential drilling plans for a lower-commodity environment.” Another executive echoed this sentiment, “The oil community prefers to await the allocation of capital until after the election”.
#### Capital Spending Trends
Despite the overall negative outlook, E&P firms’ spending plans over the next year barely budged from their late spring levels. Approximately 36% of executives plan to increase spending in the coming 12 months, which is consistent with the second-quarter level. Conversely, the number of respondents anticipating lower expenditures rose to 24% from