Post-pandemic Pushback: Permits Rally a Prelude to Pop in Oil and Gas Production

The recent surge in WTI appears to be relinking price and permitting for oil and gas producers.

The recent surge in the price of WTI appears to be relinking price and permitting. (Source: Hart Energy; Zoa.Arts, Sovenko Artem/Shutterstock.com)

The recent surge in the price of WTI appears to be relinking price and permitting. (Source: Hart Energy; Zoa.Arts, Sovenko Artem/Shutterstock.com)

With the exception of 2017, the price of WTI and the number of permits issued to produce it have tracked each other closely throughout the shale era. Since the advent of the COVID-19 pandemic, however, the two have diverged sharply.

In January 2020, U.S. permits totaled about 2,900 and the price of WTI had dipped just slightly from December to average a sturdy $57.52/bbl for the month. After that, both suffered a harsh decline, with WTI slumping to its nadir of $16.55/bbl in April 2020 and the number of permits to barely above 1,000 in May.

From there, WTI commenced a slow but steady climb in which the February 2022 average price eclipsed $90/bbl. The number of permits issued in February, however, was the lowest in more than a decade.

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Joseph Markman

Joseph Markman, senior editor for Hart Energy, covers markets and provides data analysis for all Hart Energy editorial products.