If the prices of oil and gas pull back some this summer, that's not a bad thing for the U.S. economy. Oil has fallen since April, even as the government reports commercial inventories are the highest they've been in several years. I think the momentum is slower than it has been-but only for a while. Some analysts predict a tight situation in the fourth quarter when the heating season takes hold, knowing that world production appears at full capacity. "Much of the macro risk has materialized; but the risk is that for 'momentum' stocks, the recent cycle of upward earnings revisions goes into reverse as the market adjusts...our focus remains on where operational catalysts remain in place...," says analyst Doug Leggate of Citigroup Smith Barney. Although he was speaking about the integrated oil companies, his comment applies to the other sectors of the industry too. Or as analyst Lloyd Byrne of Morgan Stanley says, buy the "haves" and forget the "have nots." The haves are E&P companies that can grow production while keeping costs in line. Who is set to bring a new field on production in the second half? That's where opportunity lies. If momentum appears to be slowing, that's a good thing. Producers, drilling contractors and service providers need to catch their breath as their backlogs grow longer and they work at near 100% capacity. Dayrates and utilization rates are still climbing. Anecdotal evidence from reporters here at Hart Energy Publishing shows that people are busier than ever before-e-mails to energy executives after hours are surprisingly receiving immediate responses. Investors may take a breather as well, moving more money onto the sidelines if oil and gas prices go down. But Bank of America research analyst Jim Wicklund asks in a recent report, "Where else are they going to put their money if not in energy?" The U.S. rig count has bobbled around during the past few weeks, between 1,300 and 1,348. But the fundamentals are still strong. One reason the rig count appears topped out may be that for most contractors, the rigs that are able to work have left the yard. Employees are refurbishing a few, but the majority of the stacked rigs are cold-stacked-it's very hard to see them being reactivated. We know things are going well, but a check with the various companies reveals just how well. Some 27 new jackups are under construction. Rowan Cos. announced that for the first time since it acquired rig-builder LeTourneau in 1994, it has a contract to build a new super-class jackup for a customer, as opposed to building a rig to beef up its own fleet. Helmerich & Payne announced deals to build 10 of its patented FlexRigs for Williams Production RMT Co. and three for ConocoPhillips. Unit Drilling Corp., whose contract revenues rose 53% in the first quarter over the year-ago quarter, is building three new rigs. Its dayrates in the first quarter were 24% higher than in fourth-quarter 2004. GlobalSantaFe took delivery of two new ultra-deepwater semisubmersibles that are already spoken for, beginning work in July. Grey Wolf reported a 48% increase in total rig days worked, including a 41% increase in its Gulf Coast division. Tidewater Inc. is in the process of building 15 new supply vessels and plans to "unstack" four older vessels in this quarter. In the first quarter, Grant Prideco sold more drillpipe than in any quarter since it went public. It sold 68% more drillpipe footage than last year, accompanied by an 11% increase in the average price per foot. Operating margins in its technology and services segment increased tenfold, to 21% from just 2% in first-quarter 2004. Maverick Tube has begun work on a $12-million expansion of its coiled-tubing facility in Houston. Proppant-maker Carbo Ceramics is building a new manufacturing plant that analysts say will be at 100% capacity when it opens this December. Dawson Geophysical added four seismic crews since last year and plans a fifth. "We expect market conditions to remain favorable for both additional revenue growth and price improvements over the balance of the year," says Chad Deaton, Baker Hughes chairman and chief executive officer. Meanwhile, we shudder to see that Ohio Democratic Congressman Dennis Kucinich-and 15 co-sponsors-introduced a bill to revive a windfall profits tax on producers. It would kick in when profits for any fuel derived from oil or gas are above "reasonable" amounts. Sir, "reasonable" cannot be defined, except to say that it is permanently higher than it once was and higher than where you think it should be. Jeffrey Currie, a Goldman Sachs & Co. managing director, told energy executives at the recent IPAA Oil & Gas Investment Symposium in New York that a windfall profits tax would harm more than just the energy industry's pocketbook today. "It will distort investment patterns for at least the next two decades," he said. I never thought a California Congressman would come to the industry's rescue, but now it could happen. The California Independent Petroleum Association notes in its weekly report that this bill would have to go before the House Ways and Means Committee, chaired by none other than a Republican from oil-producing Bakersfield, Congressman Bill Thomas.