The oil and gas industry in Texas and surrounding states slowed down slightly during the third quarter (Q3) of 2025, according to a new report from the Federal Reserve Bank of Dallas.
The report, known as the Dallas Fed Energy Survey, showed that business conditions are still unfavorable. While activity has improved compared to the previous quarter, it has remained negative.
The Business activity index in Q2 stood at -8.1 and rose to -6.5 in Q3.
The survey's company outlook index dropped significantly from -6.4 to -17.6, highlighting growing concerns among energy executives. Although the outlook uncertainty index remained elevated, it only declined slightly from 47.1 to 44.6.
Oil and gas production both declined. The oil production index held steady at -8.6, while the natural gas production index was relatively unchanged at -3.2.
Energy producers reported higher spending on finding new oil and gas, as well as operating existing wells. Service companies, those that provide equipment, also saw rising costs, though the increase was slower, as the input cost index went from 40.0 to 34.8.
Employment demand was stable, with little change in hiring or hours worked. The aggregate employment index came up from -6.6 to -1.5, while the employee hours index stayed near -3.7. The wages and benefits index stayed at 11.5
Companies expect oil prices to average $63 per barrel by the end of 2025, and to rise to $77 by 2030. They expect natural gas prices to increase from $3.30 per unit to $4.50 in five years.
