Energy Sector Outlook: Modest Prices and Economic Impacts through 2026

LUBBOCK, TX – As we navigate through 2026, oil and gas executives are adopting a cautious approach, anticipating a landscape characterized by modest pricing and significant uncertainty. This perspective, revealed in the latest Dallas Federal Reserve Energy Survey, highlights the potential consequences for fuel costs, rural economies, and agricultural input expenses.

Price Projections for Oil and Gas

According to the survey, respondents expect the price of West Texas Intermediate crude oil to stabilize around $62 per barrel by the end of 2026. Long-term projections suggest slight increases, with estimates rising to $69 in two years and reaching $75 in five years. Meanwhile, natural gas prices are predicted to hover near $4.19 per MMBtu by the end of 2026. These stable prices imply limited short-term price increases, prompting a disciplined approach towards capital expenditures in the energy sector.

Operational Challenges Ahead

The energy sector continues to face operational hurdles. Business activity remained negatively impacted late in 2025, with a general sense of unease prevailing. Production levels were largely stagnant, and oilfield service companies reported decreased margins, underutilization of equipment, and declining service prices. Moreover, employment figures indicated a worrying trend, with fewer hours worked and diminished wage growth.

Implications for Agriculture

The agricultural landscape presents a mixed outlook amidst these energy market dynamics. On one hand, stable oil prices could ease costs related to diesel, freight, and irrigation, which could be beneficial for farming operations. Conversely, the pricing of natural gas will continue to play a critical role in determining fertilizer and energy expenses. Additionally, a slowdown in drilling activity might impact economic support within rural areas heavily reliant on the energy sector.

Farm-Level Takeaway

In summary, while moderate oil prices may bring relief from fuel costs, the ongoing caution in the energy industry could pose challenges to economic growth in rural regions. Stakeholders must remain vigilant as they navigate this complex landscape leading up to 2026.