Sharp Decline Continued in Second Quarter Energy Activity

The Federal Reserve Bank of Kansas City June 10 released the second quarter Energy Survey for the Tenth District. The district encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma, and Wyoming, as well as the northern half of New Mexico. According to Chad Wilkerson, Oklahoma City Branch executive and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District energy activity declined sharply again in the second quarter and was expected to remain primarily unchanged going forward.

“District energy activity dropped considerably again during the second quarter of 2020, but many firms expected some stabilization heading forward,” said Wilkerson. “A majority of firms in our survey applied for and received SBA PPP loans, but low energy prices have hurt profitability. Most regional firms do not plan to increase production levels until oil prices recover more.”

The Kansas City Fed's quarterly Tenth District Energy Survey provides information on current and expected activity among energy firms within the district by monitoring oil- and gas-related firms located and/or headquartered in the region. Results are based on total firm activity. Survey results reveal changes in several indicators of energy activity, including drilling, capital spending, and employment; projections for oil and gas prices were also indicated.

Firms reported that oil prices needed to be on average $51/bbl to substantially increase drilling. Another finding was that quarterly indicators of energy activity declined nearly as much in the second quarter of 2020 as in the first quarter. Although the drilling and business activity index rose somewhat, continued substantial decreases in activity was indicated. The drop in the revenues and profits indexes accelerated, and the employment and wages and benefits indexes fell further.

The year-over-year drilling and business activity index remained highly negative, although it was higher than the prior quarter’s record survey low. Indexes for total revenues, capital expenditures, delivery time, profits, employment, employee hours, wages and benefits, and access to credit continued to decrease.

Expectations indexes rose considerably from very negative levels in Q1 2020, and future energy activity was expected to remain largely unchanged. Price expectations for oil, natural gas, and natural gas liquids increased, rebounding somewhat from earlier in 2020.

Results from past surveys can be found at

More information is available online at

SOURCE: The Weekly Propane Newsletter, July 16, 2020. Weekly Propane Newsletter subscribers receive all the latest posted and spot prices from major terminals and refineries around the U.S. delivered to inboxes every week. Receive a center spread of posted prices with hundreds of postings updated each week, along with market analysis, insightful commentary, and much more not found elsewhere.