There will be an increase in U.S. drilling activity in the coming months, according to a recent report from Salomon Smith Barney. The financial-service firm tracks drilling permits issued in each of the 29 states where drilling occurs. The latest data on drilling permits issued indicate that sequential (quarter-to-quarter) and year-over-year changes will be positive, Salomon Smith Barney says. In October, the latest month for which the firm had data, the number of drilling permits issued rose 17.6% from the prior month, on the heels of an 8.6% increase in September. The total number of permits issued in October was 3,215, a healthy 67.5% increase from the prior year, indicating that oil and gas companies are finally seeing enough relief from higher oil prices to increase their spending. From 1994 through the first half of 1998, state authorities issued between 2,000 and 2,800 permits per month. During the price collapse, that number plunged to 1,400 to 1,800 per month. Since July 1999, the number of permits issued has risen steadily, finally breaking through the lower range into more normal numbers. Texas led the nation in October with 1,005 permits issued. Wyoming followed with 809 and Oklahoma ranked third with 280. The number of permits in California has jumped significantly, from 150 in June and 147 in August, to 240 in October. -Leslie Haines