Most oil executives say Wall Street — not the government — is preventing US energy producers from boosting output more

• More than half of oil executives blame investor pressure to maintain capital discipline for holding back growth despite high prices.
• By contrast, just 6% blamed government regulations, according to a survey from the Dallas Fed.

More than half of oil and gas executives pointed to shareholder influence as the main reason US crude producers are holding back despite surging energy prices.

In a March Dallas Fed survey, 59% of executives from 132 firms reported that the main reason publicly traded oil producers are restraining growth is due to investor pressure to maintain capital discipline.

Fifteen percent said "other," which includes a combination of personnel shortages, limited availability of equipment, and supply-chain snags, according to the data.

Environmental, social and governance issues garnered 11% of the vote, 8% said lack of access to funding, and just 6% blamed government regulations. Some also cited uncertainty around oil prices, and whether they would continue to remain elevated.

During the height of the US shale boom, oil producers raised billions of dollars from Wall Street to help fund aggressive plans for drilling and pumping oil. But investors began demanding more "capital discipline," meaning more dividends and buybacks, instead of bigger investments in production growth.

Shale companies largely obeyed, and that investor pressure has kept output in check even as oil prices have soared past $100 per barrel.

In comments provided to the Dallas Fed, some respondents attributed the restraint to a medley of reasons.

"[It's] a combination of investor pressure, ESG issues, government regulation and lack of growth capital," said one respondent. "Spending will increase with improved cash flow, but I don't see companies raising capital and going into debt to invest in production growth."

Another comment said the "two headed monster" of capital discipline as well as government regulations being influenced by climate-focused progressives influencing President Biden.

The survey comes as the administration comes under pressure to boost US energy production to tame skyrocketing prices and to help reduce Europe's dependence on Russia amid its war on Ukraine.

At a recent closed-door White House summit with top corporate executives, JPMorgan CEO Jamie Dimon urged the Biden administration to develop a modern-day "Marshall Plan" to boost domestic energy.

Meanwhile, prices are expected to remain high or soar even further as the European Union discusses new energy sanctions on Moscow. Morgan Stanley predicted oil will trade at about $120 in the third quarter. But top traders forecasted on Wednesday that oil prices could double to $250 this year because Russia's supply to Europe could crater.