Each week, Baker Hughes puts out a tally of all the oil and gas rigs in North America.
Lately, the numbers have been going sideways, and before that had come down a bit. Here’s the chart:
[credit provider=”Baker Hughes” url=”http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm?showpage=na”]
At least one writer believes this is a sign America’s energy boom could soon be going “bust” or is at least slowing down.
But what do rig counts track? Citi’s Tim Evans emails to say they track prices with about a 6-month lead (in other words, a secular price trend would be felt six months later in a rig count trend).
They also track the broader economy — more demand equals more pumping. Here’s the change in rig counts versus change in the University of Michigan’s consumer confidence index since 2007:
[credit provider=”Baker Hughes/Michigan/Bloomberg”]
The amount of oil and gas that remains technically recoverable is astronomical — 220 billion barrels of oil and 2.2 quadrillion cubic feet of natural gas. We only drill 2.5 billion barrels a year of the former and 25 trillion cubic feet of the latter each year.
This is not stopping soon.