Posted on 01/19/2016 3:09:58 AM PST by thackney
...By turnover and investment, petroleum exploration, production, refining, transportation and marketing is one of the largest industries in the United States and around the world.
In the United States, businesses engaged in oil and gas extraction and refining spent almost $200 billion on new equipment and structures in 2013, the most recent year for which data are available.
Oil and gas extraction and refining accounted for more than 14 percent of all new capital expenditures in the United States in 2013, according to the U.S. Census Bureau.
Oil and gas drilling and associated services on their own accounted for more than 13 percent of whole-economy capital expenditures...
The oil and gas drilling boom drove an enormous amount of extra expenditure and provided a significant boost to the entire economy....
Unsurprisingly, the collapse in investment spending has produced a measurable slowdown in the broader economy.
The downturn is evident in everything from data on industrial production to freight movements by road and rail....
The impact is not confined to the United States. Oil and gas projects around the world worth $380 billion have been postponed or canceled since 2014 according to Wood Mackenzie, an energy consultancy.
Several hundred thousand jobs have been lost at exploration and production companies and oil field services firms.
But these are only the direct spending cuts and job losses. The downturn in oil and gas is rippling all along the supply chain.
The oil and gas industry is not just a major producer of inputs used by other manufacturers, service suppliers and households, it is also a major consumer of raw materials, manufactured items and services itself.
(Excerpt) Read more at reuters.com ...
Oil will rebound. What is a good investment now?
Good one. And the kid should have taken that advice.
True today as well.
The feedstocks for plastics are down in price: ethane, propane, etc.
I think higher prices have more of a detrimental effect, at least, as far as its contribution to gas prices go.
Higher gas prices do more harm to the general public which far outweighs harm to a particular industry based on the sheer volume.
Good grief. We need Milton Friedman back on the job. Someone needs to send him a message.
Yes, the petroleum industry is hurting. Profit margins must be zippo. But what happens to an economy in general when the cost of energy and the costs for millions of people driving to work drops significantly. If you don’t know then I’ll tell you: It is a huge boost to the general economy. That may take awhile to become evident but it will happen. People will have more money in their pockets and they will spend it, pay off their bills and invest it. Those are good things.
OTOH, we could wish for $100/barrel oil. Does that sound good to anybody?
agreed. kemp needs to stfu.
whats hurting the economy are insanely high taxes and a federal reserve interested only in printing money.
You are missing the point. The $200 Billion they spent per year on new equipment and structures is missing as well.
Pipe, Valves, Pumps, Motors, Cables, Controllers, Structural Steel, etc.
The suppliers of those are hurting badly as well. The US has a lot of sales and indirect jobs that are shutting down.
The oil glut is a symptom of a much bigger problem. Kemp talks about the bust in big oil jobs, but the real problem is lack of demand. There is no sense of stability in a job or career anymore, hence fewer people are putting down roots. A nomadic people will stop buying things and keep only the essentials - the clothes on their back, a hot plate, and a means of transportation. Everything else is fluff.
False, Demand has continued to climb, it has slowed, but it has not stopped growing.
With the over abundance of NG and the short on Ethylene plants in the US with only DOW Chemical talking about building a large facility (Gulf Coast) to provide feedstocks, plastic production in the US looks stable to declining and is a commodity at best. Unless you get on the specialty end like, EPR, high voltage insulation or semi conductor resins. The middle supply chain may be better to look at with the other C2Hx components (butene, hexene, hexane, etc) in the long run.
“You are missing the point.”
And the article is missing the point that consumer spending is over 11 TRILLION per year. That’s an economy 55 times larger than the ancillary petroleum spending.
When the consumer has more money, the economy is much more positively impacted.
Natural Gas liquids, not the natural gas (methane). Ethylene and propylene are made from ethane.
Is that why the economy is doing so well after 18 months of falling fuel prices? Or is there greater impact in the loss of other business?
That[s true. But the $200 billion dollars is still there. It’s just not in the hands of the petroleum industry. It’s moved to other pockets. They spend it on something else. Yes, it’s a disruption. Yes it is bad for the economy where the petroleum industry is strong. But you need to look at the big picture.
Do you want to take that $200 billion and give it back to the petroleum industry and then take an extra $200 from consumers and give them some real help? Not me. Lowering energy costs is a huge boost to the economy. Raising them depresses the economy. But, you are right - high energy prices are good for the energy industry and yes they invest their profits. No doubt.
“economy is doing so well “
I never said anything about the overall economy doing well or not.
I’m saying the trade off between a negatively impacted petroleum economy will be more than balanced by a positively impacted consumer economy.
Will the overall economy be “well” because of this? I doubt it because the US is becoming more and more socialist.
Any company that will weather the storm, try oil services sector that don’t have a large AR exposure.
You are right. In a normal, healthy economy high energy costs are a drag on productivity and wealth generation.
The real problem is that the rest of the economy has been doing so poorly that the domestic oil industry has been the one bright spot that has actually created good paying jobs and helped bring the GDP up.
It’s ironic that falling oil prices is now looked at as a bad thing. The new “normal” in the Bizarro World that Obama and the Progressives have created.
The Ethylene and Propylene then fed our Polyethylene and Polypropylene Reactors and Oxide plant. The Ethylene was kept in a gas state but would partly liquefy from pressure drop on startups
8 HDPE Low Pressure, 2 Polypropylene and 2 LDPE High Pressure. We made tons of plastic an hour, tons. The Olefins plant had other by products as well; acetylene and I believe some butene and some bad carcinogens.
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