By Liz Hampton

DENVER (Reuters), – U.S. crude oil producers have difficulty finding enough personnel, vehicles, and equipment to meet rising demand, according to executives from oilfield services firms.

Problems are making it difficult for the United States to respond to increased prices. It could also mean that global output will take longer to recover from the coronavirus epidemic. This would lead to oil companies draining their inventories, which in turn could contribute to rising prices.

Consumer inflation is rising due to higher energy prices. Last month’s 6.2% was the highest level in thirty years. Biden has called on oil producers and signaled that the administration might increase oil production to meet rising prices.

Service firms and drillers who bring oil and gas to markets are facing delays and shortages of everything, from truck trucks and electronic pumps to skilled workers and equipment. Although there have been some solutions, the crunch is not yet here. However, oilfield services results are suffering from shortages that could impact U.S. production gains in early 2019.

Access to submersible pumps, which boost well pressures and pick-ups for workers and equipment has been limited by logistics snags. The U.S. Oil Production figures indicate that output is still below its peak of nearly 2 years ago, but global demand will surpass pre-pandemic levels in June.

The Dallas Federal Reserve Bank polled nearly two thirds of Texas executives and found that they are having difficulty getting supplies. Nearly half said the situation has gotten worse. Around half of the respondents indicated that it would take between seven and 12 months for problems to be resolved, while 18% predicted shortages lasting more than a full year.

‘GETTING WORSE’

Brad James, Chief Executive of Enterprise Offshore Drilling said that “We will reach a point when we can no longer handle any additional work with our existing inventory.” He predicted that the problems we are seeing would get worse.

The pressure on supply isn’t as severe as it once was because many producers of shale oils have made promises to reduce spending and use the cash from high prices instead to pay dividends or to reduce their debt.

However, many producers seem to be standing by while oil service firms struggle. James said that some requests for orders have not been answered and lead times for specific drilling equipment are too long. Enterprise is now cannibalizing idle rigs off the Louisiana coast in order to maintain existing rigs.

(For a chart on worker shortages and pay, click here: https://graphics.reuters.com/OIL-LOGISTICS/klpykdmzxpg)

“Without significant additional investment, land contract drillers are at their limit with the rigs they can deploy to satisfy the requirements of today’s multiple-well, very long-lateral drilling,” said Richard Spears, vice president of oilfield consultancy Spears & Associates.

Long delays and equipment shortages are driving up the cost of what’s available. Liberty Oilfield Services (NYSE) in Denver, Colorado, suffered a $12 million drop to third quarter earnings due to rising costs.

SIX MOUNTHS TO BUY A TRUCK

Fredrick Klaveness (CEO of NLB Water LLC) has been waiting for $200,000 in orders. The reason is that suppliers have yet to ship certain components.

Klaveness said, “One little piece can make all the difference.” NLB could lose an important contract if the membrane modules ordered aren’t received on time. It is possible that parts worth less than $5,000 could delay the whole order. These are not fancy microchips or other gadgets. Instead, they’re simple components made of basic materials like titanium and stainless steel.

Klaveness explained that the five-month delivery time for the heavy Dodge Ram pickup, which he ordered back in June, took Klaveness almost five months. Klaveness said that he has found ways to continue business operations, including buying materials from Canada and one time picking up galvanized metal from multiple locations. Home Depot (NYSE: ) Colorado, and then transporting it from Colorado to West Texas.

THE RIPPLE EFFECT

A shortage of electronic components in the automotive and computer industries is threatening renewable energy, as well as oil & gas. Companies are being forced to digitalize their operations in order to increase renewable power and reduce greenhouse gas emission.

Spears, an energy consultant said that companies who convert compressors for pipelines to use electric motors are finding spare parts.

Trido Solutions CEO Ru Schaefferkoetter said that basic materials like steel and aluminum are difficult to come by. As the Biden administration encourages solar development, she worries about how supplies will get more limited.

President Joe Biden could sign the Infrastructure Bill into law this Monday. It includes funds to improve power infrastructure, expand renewable energy, and create a Grid Authority.

“There are a growing number of people laid off on solar projects because there are no panels,” said John Berger, CEO of Sunnova, at a recent Kansas City Federal Reserve Conference. An “extreme shortage of electricians,” is another concern, he said.