KUALA LUMPUR (April 15): High oil and natural gas prices are not translating into increased production due to investor pressure to maintain capital discipline, according to an analysis by the Institute for Energy Economics and Financial (IEEFA).

IEEFA examines issues related to energy markets, trends, and policies.

In a report on Wednesday (April 13), IEEFA said that as oil prices climb higher, publicly-traded oil and gas producers are proving reluctant to increase drilling and output.

Citing a Federal Reserve Bank of Dallas energy survey, the institute said the primary reason for the sluggishness is investor pressure to maintain strict control over capital expenditure.

The analysis found that the chief goal of the US oil and gas industry is no longer production growth.

IEEFA energy finance analyst and author of the report Trey Cowan said this trend shows that the top issue for oil and gas operators in the US is not increasing production but rather paying down debt and rewarding shareholders.

“High oil and gas prices no longer seem to spur increases in production,” he said.

Cowan said as more nations cut off purchases of Russian gas in response to the invasion of Ukraine, there have been increasing calls in the US to boost production and drive down gas prices for consumers.

He said that unlike in past booms, oil and gas producers have not responded with more drilling, opting instead to benefit from increased operating revenues.

The IEEFA analysis also found that oil and gas companies are poorly positioned to step up production as many companies have depleted their drilled but uncompleted well inventories to keep costs down.

The report also pointed out that regulations and permitting are not key factors in slowing down production or keeping prices high.