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After an epic collapse in crude prices, US oil companies still aren't blinking. Investment in drilling rigs and wells actually improved in the closing months of 2014.
Outlays for rigs and wells climbed at an 8.9 per cent pace in the fourth quarter after an 8.3 per cent increase from July through September, Friday's Commerce Department report on gross domestic product showed. Those figures are a slight slowdown from numbers in the first half of 2014, but are definitely no halt.
That increase is even more impressive when you look at what happened to equipment spending across all businesses in the world's largest economy. That fell by the most since the recession, taking some of the lustre off the consumer-driven economy.
Spending on oilfield machinery is more difficult to decipher. That's because the figures are included in the "other equipment" category in the government's breakdown of non-residential investment.
The Commerce Department lumps together equipment such as drill pipes and bits with agriculture, construction and service-industry machinery. Purchases of "other equipment" fell at a 0.1 per cent rate in fourth quarter after a decline of 4.1 per cent in the previous three months - not exactly a big hit to GDP.
So if the epic slump in crude isn't enough to stop American oil companies, what might? Prices could slide even further, or fail to rebound the way the industry's executives are surely hoping. Crude has already dropped another 14 per cent since the end of last year.
"Business investment is the trickiest'' component of GDP to predict right now, said Aneta Markowska, Societe Generale's chief economist. "Obviously the low oil prices are likely to depress investment among energy producers," she said.
"This is at least partly offset by a better outlook for investment from those non-energy producing companies,'' she said. In the end, "I wouldn't completely throw in the towel on business investment on the back of this energy story - it's very mixed.''
