Crude Oil Price Depression Increasingly Impacts Energy Development Negativity

A somber note regarding the increasingly negative results emanating from the ongoing oil price crash has sounded depressing tones of cutbacks by the U.S. energy industry's backup manufacturing.

U.S. Steel, a major producer of oil field tubular and supplemental products critical to crude oil and natural gas excavation and drilling, has announced a major cutback of such products, including the idling of plants in Ohio and Texas, which will lay off almost 800 workers. A spreading growth in layoffs by technical service providers such as Schlumberger and Baker-Hughes may just be the beginning of major industry layoffs.

The subsequent production weakness of hydraulic fracturing (fracking) couldn't come at a worse time for U.S. Steel, which had been expecting a 2015 comeback year, encouraged by a resurgent American auto industry, along with the booming oil and gas sector. The shortfall of "fracking" expansion anticipated in the months to come are also concerning other U.S.-based steelmakers such as Nucor, Steel Dynamics, ArcelorMittal, and AK Steel Holding Corp.

Oversupply in oilfield tubular, especially, has been exacerbated by an overage of steel imports, which were up 35%, to 38 million tons during the first 10 months of 2014. Current layoffs contemplated are sure to expand later this spring, barring an unexpected solid upward price reversal during the first quarter 2015.

What has gotten lost in the obvious consumer price benefits "at the pump," in addition to the significant reduction of air transport jet fuel, etc., is the scope of reduction in growth by an economic sector that had become the driving force of America's manufacturing comeback.

With natural gas expansion setting new records, its increased utilization in utility power generation, the chemical industry, and export potential have indicated greater bases for optimism. The overall oil and natural gas sector may still acquit itself moderately well this year as a positive component in America's 2015 gross domestic product growth. This will mount U.S. natural gas and all its aspects on top of the world's natural gas revenue generation.

For future easy access to my blogs, please use the link below, and bookmark it to your desktop. The old link you may be using is still available. However, an alternate link is: mydesert.com/beschloss