Supply Chain Woes, Inflation Crimp U.S. Producers’ Growth Potential

Supply Chain Woes, Inflation Crimp U.S. Producers’ Growth Potential

A pulling unit or workover rig providing maintenance on an oil well in the canyon country of Utah.. ... [+] (Photo by: Jon G. Fuller / VWPics/Universal Images Group via Getty Images) Investor concerns about returns are not the only thing keeping a cap on U. S. oil and gas production growth. Producers are struggling with inflation, supply chain lags, and labor shortages – all things that make it difficult to ramp up quickly and cost-effectively. There's much confusion out there — in the media, political circles, and the general public — about how U. S. oil and gas producers plan their operations for the months ahead and the degree to which they could ratchet up their production to help alleviate the current global supply shortfall and help bring down high prices. It's not as immediate or straightforward as some might imagine. There are many reasons why producers are either reluctant or unable to increase their oil and gas production quickly. Capital budgets are up in 2022 by an average of 23% over 2021. That increase seems substantial, but analysts estimate that about two-thirds (15%) results from oilfield service inflation. That means the "real" increase in CAPEX – the dollars