Mideast Woes Could Pump Up U.S. Oil Industry

Iraq’s invasion of Kuwait is causing some smiles on the faces of those who have struggled through the ragged recovery of the U.S. oil industry.

In Houston, a city still in the final recovery stages of the last oil bust, there are whispers of another boom.

“The oil and gas business has been down for quite a while, and so we need a little good news. But I hate for it to come as a result of a war,” said John Faulkinberry, chief financial officer of Paramount Petroleum Co., an independent oil and gas exploration and production company.

The oil industry has been inching toward renewed vigor for some time, anticipating higher oil prices in the coming years.

Companies began last year to increase their exploration budgets, and new drilling and exploration techniques have sparked regional booms.

But with the cutoff of oil from Iraq and Kuwait, and worries about the rest of the Persian Gulf, the stumbling recovery could hit full stride.

A sustained increase in oil prices could fuel domestic drilling activity, raise revenues and attract investors who were scared away when prices plunged in the mid-1980s, observers said.

The number of rigs actively exploring for oil and gas rose to 4,500 at the height of the boom in December, 1981, but it plunged to a low of 663 after oil prices collapsed in the summer of 1986.

This week, the count totaled 966--down 30 from the previous week but up from the 874 working rigs a year ago, according to Houston-based Baker Hughes Inc., which keeps track of the count.

“If prices remain at the current levels, I’d say you’d have a significant impact (on drilling activity),” said Ike Kerridge of Baker Hughes. “You could start seeing that in a few weeks.”