Posted on 12/30/2014 5:36:50 AM PST by thackney
Texas manufacturers are worried about what plummeting oil prices could mean for business in 2015, according to the Federal Reserve Bank of Dallas’ monthly survey.
Dallas Fed data showed that manufacturing activity increased in December even as demand moderated.
The Texas production index, a measure of the state’s manufacturing climate, increased from six to 15.6 since November, the Dallas Fed said.
But other measures showed that demand slowed: the new orders index fell from 5.6 to 1.3; and the survey’s composite index, expected to come in at 9, missed the mark at 4.1.
Several manufacturing executives expressed pessimism over how falling oil would affect business next year.
“The drop in crude oil prices is going to make things ugly…quickly,” said an executive in metal product manufacturing.
A chemical manufacturing executive noted that “energy volatility will cause our customers to keep inventories tight,” and that falling oil prices would put pressure on margins.
Other executives were less negative, but were still receiving mixed signals from their customers.
“We have received comments on both sides of the issue ranging from ‘equipment purchases will be delayed’ to ‘we are using this period to ramp up for next year,’ ” said one respondent.
According to Business Insider, the new survey showed that while U.S. manufacturing has benefited overall from the cheap fuel costs the shale boom created, Texas manufacturers serving customers in the oil patch will likely feel a greater share of the pain as plummeting oil prices decimate drilling activity.
The number of operating oil and gas rigs fell again for the week ended Dec. 26, according to Baker Hughes.
Cheap energy MUST be the ultimate best thing for the American economy
In other words, all the wealthy are worried about their oil well dividend / royalty checks, petro based stock portfolios, and revenues while the rest of the nation is actually using the money that they would usually use for gas to pay for groceries that have gone way up during King Obama’s reign of terror...
Don’t give too much credit to a headline.
On the other hand, this article is discussing more those outside the oil industry, that have benefited from the oil industry purchases of the last few years.
Manufacturing that sells to the oil industry, not the industry it self.
Makers of pumps, pipelines, housing, electrical switchgear, etc...
I think what this really proves is that the oil industry was manipulated all along to create higher prices artificially. People should really be pissed that the MSM and the industry is tying to manipulate the price upward agin because we know damn full well they will take the new price to a whole other level than before so they can bring it back down to a Lelia that is where it was last year. This is how they work because the higher prices on’t effect the wealthy; only pople living on shoe string budgets like us.
I think what this really proves is that the oil industry was manipulated all along to create higher prices artificially. People should really be pissed that the MSM and the industry is tying to manipulate the price upward again because we know damn full well they will take the new price to a whole other level than before so they can bring it back down to a level that is where it was last year. This is how they work because the higher prices on’t effect the wealthy; only pople living on shoe string budgets like us.
When the demand was growing faster than the supply, the prices rose. When the supply is seen to be growing faster than the demand, the prices fell.
Is that what you consider manipulation, supply and demand?
If the oil industry could manipulate prices, prices would never fall.
> Is that what you consider manipulation, supply and demand?
If you can control the supply to manipulate the price, yes...
Do you believe that suppliers of products should be forced to produce and sell at a low price?
You should recognize that high prices are the cure for high prices in the oil business.
While OPEC did not increase their supply, the higher prices of the past few years created the opportunity for the US to produce more from our more expensive shale fields. That increase in supply eventually helped drive the market price down, while putting more jobs in the US. And as this article shows, it wasn’t just oil industry jobs, but real manufacturing of products in the US.
> Do you believe that suppliers of products should be forced to produce and sell at a low price?
No. Thats the government’s job; to tell people how to operate their businesses using regulations...: )
/s
I get your point.
Please recognize, that the government is part of the supply and demand curves, pushing them both to higher points with those regulations, taxes and restrictions.
The oil industry goes through boom/bust cycles fairly regularly. They have little or no control over prices.
Geopolitical forces cause the cycle in most cases and oddly enough usually trump supply and demand.
If you want to point fingers at someone for this latest run-up, point them at the commodity speculators. They rode this harder and longer than it should ever have lasted.
The main good I see out of this is that we have greatly improved exploration and recovery techniques since the last bust in ‘86.
The AAPG (American Association of Petroleum Geologists) motto in ‘86 was “Quick fix in 86 or chapter 11 in 87.”
For most of the little guys, it was Chapter 11.
My boss at the time bought good drill pipe for little more than scrap price and we built buildings out of it.
I was fresh out of school with a Geology degree and no prospect whatsoever of getting a job in the field.
It’s good to get perspectives from those that work in the field for those of us who don’t. Thanks for the education...: )
The entire economy of Texas at the time was much more tied to oil more than it is now (I hope). While the rest of the nation was doing OK during the Reagan Revolution, our economy was in tatters.
As for me, I was grasping at straws for a job and wound up a fireman.
I have friends and kin in the oil patch today and they are scared for the future. Many of the little service companies here in the Barnett field in north TX have already pulled up stakes or moved on to the Bakkan or Permian.
Life was good when natural gas peaked at $15/million but not so good when it went back to in line with its historical price in the $5 range.
I met a guy one day when I was building buildings that had been a driller prior to the 86 bust. He said the bottom line of his 1040 was over $1 million the previous year. He was mowing and bailing hay. Ouch!
“You should recognize that high prices are the cure for high prices in the oil business.”
It’s hard to even guess at how much more efficient cars along AND all of the industries that supply the parts and assemble them are than say, 35 years ago. Those efficiencies were spurred on by...high energy prices.
That and government regulations ;-)
But if there is a cheaper way to accomplish a task or goal, and enough people want it, it typically finds a way to the market.
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