The US oil industry is facing a sharp increase in production costs.

According to the Dallas Fed energy survey, while activity in the oil market continued to recover and supply grew faster during the fourth quarter, costs also increased.

Oil production rose from 10.7 to 19.1, while costs surged from 60.8 to a record 69.8.

But despite higher costs, about 44% of respondents said they expect a modest increase in capital spending in 2022, while a third said they expect a significant increase. 8% said they were expecting cost cuts next year.

In terms of price expectations, the industry is cautious and optimistic. When asked what price their companies use to plan their capital expenditures, nearly a third said it was between $ 65 and $ 70 a barrel. A minority, about 25%, said they would budget based on oil prices between $ 70 and $ 75 a barrel.

US oil companies are also planning to expand production next year.

According to 49% of surveyed respondents, the main goal of many companies in 2022 was to increase production. Only 15% said they will maintain the current level of production, while 13% said their primary goal is to reduce debt.

And despite rising costs, the six-month outlook for the industry remained bullish, although the figure dropped from 58.9 in the third quarter to 53.2 in the fourth quarter.

Daniel Yergin of IHS Markit said crude oil production in the United States could grow by nearly 1 million b/d next year.

US producers cut production during the pandemic in 2020, from a record 13 million b/d to 11 million b/d. Now, it is around 11.8 million b/d, according to the Energy Information Administration.

Yergin also revealed that he talked with US Energy Secretary Jennifer Granholm and oil industry officials to ask for increased production.