From Low Oil Prices to Geopolitics, U.S. Energy Feeling Pressured

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land Texas)

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Summary

Energy sector employment may be fizzling out despite the political support for the U.S. oil and gas sector. Oil prices, meanwhile, won't be supportive of domestic shale.

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Reduced Hiring Activity in Texas Shale Patch

Though U.S. inflationary pressures are modest even with global trade tensions, there may be some lingering headwinds for employment in the energy sector.

Examining data delayed by the federal U.S. government shut down last year, the Texas Independent Producers & Royalty Owners Association (TIPRO), a trade group representing the interests of nearly 3,000 upstream companies, found employment was soft in the state oil patch.

"TIPRO's workforce data continues to indicate strong job postings for the Texas oil and natural gas industry in November, but analysis revealed a decline in Q4 driven by lower oil prices, industry consolidation, and ongoing efficiency gains, which allow companies to maintain or increase production with reduced hiring activity," a report from Friday read.

The U.S. energy sector ended last year under pressure from stagnant oil production, a global oversupply situation and oil prices that are close to the level that drillers won't make a profit. On Tuesday, the U.S. Energy Information Administration (EIA) said it expected West Texas Intermediate, the U.S. benchmark for the price of oil, to average $50.36 per barrel this year, which would likely create further headaches for the industry.

From overseas, Tamas Varga, an analyst at London oil broker PVM, wrote in a Wednesday newsletter that forecasts do not bode well for the United States. The labor market, he wrote, is weakening and political backlash against a variety of U.S. President Donald Trump's foreign policy strategies could create even more problems.

"When geopolitics takes center stage," he added. "It goes without saying that its impact on geoeconomics, and, by extension, on the oil balance, cannot be ignored."

Uncertain Natural Gas Future

In the natural gas sector, meanwhile, production trends aren't expected to keep pace with commitments to exports of liquefied natural gas (LNG), which could drive up consumer prices at home.

Henry Hub, the U.S. benchmark for the price of natural gas, is expected to average $3.59 per million British thermal units this year, a slight decline from last year. The price for Henry Hub was revised lower by a whopping 10% from December estimates.

By next year, Henry Hub will be up 32% from last year's average of $3.46, according to EIA's latest Short-Term Energy Outlook. LNG exports, meanwhile, are expected to average 18.1 billion cubic feet per day (Bcf/d) this year, a 10.3% increase from last year should the forecast prove accurate.

That's showing up in price data. On Tuesday, the U.S. Bureau of Labor Statistics (BLS) reported consumer-level prices increased by only 0.3% month-on-month to December, leaving annual inflation at a modest 2.7%, though still above the 2% target. For piped gas services, meanwhile, data showed a 10.8% increase over the 12-month period to December.

That's the highest increase for any consumer good listed by the BLS. The price for groceries, federal data showed, increased by 2.4% annually to December. BLS, however, did not publish data for October or November due to the federal shutdown, so data may be skewed.

Despite political support from the Trump administration, the domestic energy sector as a whole was pessimistic for much of 2025 amid fears of a lower-for-longer price cycle for crude oil.

"The consensus view of lower oil prices hurts lenders and investors," a respondent said in the fourth quarter energy survey from the Federal Reserve Bank of Dallas, published in December.

By the Numbers

• 10.8% annual increase in consumer energy prices
• 2.4% increase in grocery bills
• $50.36 crude not good for U.S. producers

Key Takeaways

• Energy Department pointing to headwinds.
• Hiring may be under pressure.
• Domestic gas challenged by LNG export commitments.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resource's Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).