Oil and gas in the United States are slowly stepping up investments in wells other industry building blocks for the first time in two years.
The American energy companies slashed business spending after crude-oil prices plummeted in 2014. The severe cutbacks rippled through the economy, pushing down overall growth and denting the labor market. Now, with crude holding above rock-bottom prices and companies operating at lower costs, some firms are cautiously accelerating oil production.
Business spending and the broader economy are hardly roaring back. But there are signs energy investment has at least reached an inflection point while other sectors appear unable to gain much traction, one factor that may help balance out otherwise patchy growth.
Pioneer Natural Resources Co. earlier this year raised its 2016 capital budget to $2.1 billion from $2 billion to cover the cost of five new rigs. The Dallas-based company expects to spend $2.7 billion to $2.8 billion in 2017.
Devon Energy Corp. gave its capital budget a small boost in mid-2016 to as much as $1.3 billion. The Oklahoma City-based company is still watching oil prices as it calculates spending plans for next year, but it projects about $2 billion if prices are around $55 a barrel.
David Hager, Devon's president and CEO, told investors earlier this month that prices go even higher than that, they certainly can ramp-up activity even further.
Rob Barcik, president of Oseco, said that the onshore oil business is definitely starting to slowly grow.
Business investment in other sectors, meanwhile, has been tepid, leaving the broader economic outlook little improved. And the election of Donald Trump injects at least some short-term uncertainty into forecasts. Some economists now expect faster growth driven by corporate tax cuts and stronger business spending, while others believe the potential for a trade war is a real risk.
The U.S government is happy about the improvement on oil and gas investments.
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