Texas oil executives see WTI at $88 by year-end and $79 in two years, below today's $93

Oil and gas activity in Texas, northern Louisiana and southern New Mexico kept expanding in the third quarter, but more slowly, according to the Dallas Fed Energy Survey released Wednesday. The business activity index fell to 38.8 from 46.1 in the second quarter. The oil production index rose to 20.7 from 15.0, and the natural gas production index jumped to 14.8 from 3.7.

The survey collected answers from 125 firms, 83 producers and 42 oilfield service companies, between September 16 and 24.

The number behind the number: producers are pricing a decline

The most useful figure in the release is the price outlook. Respondents on average expect West Texas Intermediate at $88 a barrel at the end of 2026, with answers ranging from $70 to $126. Two years out, they expect $79, and five years out $82. During the survey window, WTI spot averaged $98.70, per the Dallas Fed.

WTI was about $93.27 on Wednesday afternoon, up roughly 1.8% on the day, according to the live quotes on our markets board. That puts the executives' year-end average about $5 below the current price and their two-year view about $14 below it, a 15% drop. These are the companies with the most direct stake in the price, and they are not planning around it staying here. One producer said in the comments that firms are budgeting "off of a $65 per barrel or $70 per barrel price" because of the steep backwardation in futures, even as operating and development costs rise.

That fits the pattern in the survey. Large producers, those pumping 10,000 barrels a day or more, said the most common use of extra 2026 cash flow will be returns to shareholders and owners (50%), with capital spending a distant second (21%). Small producers picked capital spending first (31%), then paying down debt (23%). Higher prices so far are going to payouts more than to new wells.

Costs are still running hot

All the survey's cost indexes sit above their long-run averages. Oilfield service firms' input cost index eased to 60.4 from 64.4, while producers' finding and development cost index held at 41.5 and lease operating expenses at 43.9. Service firms' operating margin index fell to 37.2 from 52.2, and prices received for services dropped to 16.3 from 24.5, so their margins are still widening but more slowly. Supplier delivery times lengthened again, with the all-firm index at 36.2 from 31.7.

Hiring picked up. The employment index rose to 15.2 from 4.7 and hours worked to 20.0 from 11.8.

Who it actually hits: diesel buyers

The special questions are where the survey matters beyond the oil patch. Asked when fuel price spreads will return to 2025 levels, 48% of executives said diesel will take more than four quarters, against 36% for gasoline. On Persian Gulf crude exports, the most common answer for a return to normal was the second quarter of 2027 (28%), with 21% saying 2028 or later.

For a trucking company, a farm, or a contractor running excavators and generators, that is the relevant forecast. Crude can fall while diesel stays expensive, because the squeeze is in refining and product supply, a point one respondent made directly: "Diesel is the mother's milk of the economy. We are just starting to see the impact on the wider economy." Our earlier story on distillate stocks 14% below normal covers the inventory side.

24,679 independent trucking and freight are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 2,868 in TX, 2,828 in CA, 1,916 in FL. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

Operators thinking about fuel costs will find a trade-specific breakdown in our trucking playbook.

Two more details

• Credit is tight for small independents. One producer wrote that "credit for investment capital is tight, with many banks cutting back on their lending," which puts smaller operators at a disadvantage against large firms sitting on cash.
• The SPR floor. The largest group of executives (31%) put the practical minimum for the Strategic Petroleum Reserve at 100 million to 150 million barrels. The reserve held 285 million barrels as of September 18, per the Dallas Fed.

Natural gas tells a quieter story. Respondents see Henry Hub at $3.29 per million British thermal units at year-end, against a $2.97 average during the survey and about $3.12 on Wednesday. The next survey is due December 16. Live prices are on our crude oil chart.

Sources: Federal Reserve Bank of Dallas, Dallas Fed Energy Survey, Q3 2026; OilPrice.com. Prices are intraday and will change. This is market information, not investment advice.