Shortages of workers, vehicles, and equipment are preventing US crude oil producers from quickly boosting output and fully benefiting from higher prices. It could also mean that the world’s oil supply would take longer to keep up with the post-pandemic demand recovery. That would prompt oil firms to drain stocks and, in turn, push prices up further. Higher oil prices are also fueling US consumer inflation, which spiked 6.2% last month. The Biden administration has signalled that it would release more crude from the strategic reserve if prices continued increasing.
Shortages also hit oilfield service firms and could result in slower growth in US future crude production. These companies said they struggled to get submersible pumps, specialized steel, and vehicles to carry that equipment and workers. The CEO of Colorado-based oil service provider Liberty Oilfield Services said his company took a $12 million hit to third-quarter earnings due to inflated costs. Meanwhile, in a survey by the Dallas Federal Reserve Bank, nearly half of Texas business executives expect the shortage to take seven to 12 months to ease.
