Texas Oil and Gas Growth Slows Amid Rising Costs and Global Disruptions
Oil and gas activity in Texas's Permian Basin and surrounding areas has continued to grow in the third quarter of 2026, despite rising cost pressures and global supply disruptions. According to a new survey from the Federal Reserve Bank of Dallas, oil and gas production both rose between the second and third quarters.
The business activity index, which measures conditions facing energy firms, expanded again in the third quarter but at a slower pace than the prior one. The index slipped from 46.1 to 38.8, indicating continued growth but at a more moderate rate.
Many oil and gas executives polled by the Dallas Fed expect geopolitical disruptions to persist for some time, with most anticipating it will take until at least the second quarter of 2027 for crude oil exports from the Persian Gulf to return to normal levels. The spread between fuel prices and crude is also expected to take more than a year to work its way back to 2025 levels.
Cost pressures remain elevated, with input costs for oil field services firms edging down from 64.4 to 60.4. When asked about the price of West Texas Intermediate crude oil at the end of the year, the average response among executives was $88 per barrel, which is lower than the current price of $96.16 a barrel.