Workers capping an oil well in Texas. After last year’s plunge in demand, spending on… Oil and gas prices are rebounding from their pandemic lows, but the road ahead for the industry remains challenging amid new competitive threats and demands from investors.
Global spending on oil and gas production is poised to remain below pre-pandemic levels through at least 2025, according to consulting firm Wood Mackenzie, as companies face pressure to improve returns and reduce their greenhouse-gas emissions. Meanwhile, investment in renewables and other clean energy technologies is taking off, threatening to eat into the market for oil and gas long-term.
Though oil prices have notched gains since November, they’re expected to remain below levels that support attractive returns, particularly for an industry still recuperating from last year’s historic drop in fuel demand.
As a result, companies aren’t rushing back into drilling. A third of oil producers surveyed by the Dallas branch of the Federal Reserve in the fourth quarter said they planned to raise capital expenditures only slightly this year. About half said they would either keep spending flat or reduce investments.
Exxon Mobil Corp. and Chevron Corp. cut plans to invest a combined $260 billion through 2025 to as low as $177 billion.
