Subscribe to our newsletters & stay updated
March marks the end of the first quarter of calendar year 2023. The Federal Reserve anticipates another two quarter-point interest rate increases in the second quarter following the quarter-point in February: one on March 22 and one at its meeting on May 3.
Chairman Jerome Powell wants to see progress in the softening of the labor market and services other than housing. The Fed may pause sooner if the economy begins to weaken rapidly.
In his State of the Union address, President Joe Biden emphasized his success in lowering the unemployment rate to 3.5 percent.
On the other hand, the PVF industry, along with the construction industry, is in desperate need of finding and keeping qualified workers. The oil industry is experiencing a greater percentage of hires new to the industry, wanting regular hours and work/life balance that is not typical in the oilfield service sector.
The U.S. oil and gas industry employed 948,943 professional jobs in 2022, according to the Texas Independent Producers & Royalty Owners Association’s (TIPRO) latest State of Energy Report.
According to the report, 21 percent of jobs were held by 25-34 year-olds, 28 percent by 35-44 year-olds, 23 percent by 45-54 year-olds, 19 percent by 55-64 year-olds and 5 percent by those 65 years or older. The oil and gas industry paid a national average wage of $120,665. According to the report, this is 74 percent higher than the average U.S. private-sector wage.
Times have improved in the oil patch after the fossil-fuel price jump last year. Although the price of oil is currently down from recent highs, it’s still about 20 percent higher than it was pre-pandemic. As of this writing, WTI is at $77.58/barrel and Brent is at $84.03/barrel.
Should we experience a recession, the price of oil could be dampened. However, growth in Chinese demand and the ongoing conflict in Ukraine should keep the pricing floor strong.
U.S. Oil and Gas Employment Growth
Louisiana will lead the country with 1.4 percent employment growth in 2023, propelled by the oil industry and New Orleans tourism. A $2.3 billion project to create new wetlands through the diversion of Mississippi sediment into the Barataria bay also has been approved.
Oil will also help propel Texas to 1.3 percent job growth in 2023. Texas is still the preferred destination for the relocation of company headquarters. Dallas-Fort Worth and Austin are the top two commercial real estate markets. Warehousing will remain a key source of strength in the marketplace this year.
TIPRO Chairman Jud Walker states that despite facing a number of unique challenges — including supply chain bottlenecks, inflationary pressures, workforce shortages and adversarial federal policy — the U.S. oil and gas industry continues to provide economic support.
“Oil and natural gas development, led by Texas operators, will play an important role in meeting the growing global energy demand for decades to come under any realistic scenario,” he notes.
Texas was the top oil-producing state in 2022, with 1.82 million barrels produced, followed by New Mexico with 535 million barrels. Texas also was the top gas-producing state in 2022, with 1.74 trillion cubic feet, followed by Pennsylvania at 7.5 trillion cubic feet.
New Mexico is third in job creation, with growth anticipated to be 1 percent. The resurgence of oil drilling and mining helped the state’s unemployment to decline the fastest in the country last year. Also, investment in hydrogen generation is focused on the Albuquerque area.
Oklahoma is primed to see a 0.8 percent growth in 2023, helped by oil prices, even though the overall unemployment rate will rise to 4 percent from 3.4 percent. Alternative energy is an area where a regional compact between Arkansas, Louisiana and Oklahoma is competing for $7 billion in federal money for hydrogen hubs.
Marathon Petroleum Corp. plans to spend $1.3 billion on capital items in 2023, with a large amount of capex allocated for “low-carbon opportunities.”
Approximately 70 percent will be focused on capital growth and 30 percent on sustaining capital.
Pricing for domestic commodity carbon steel butt-welding fittings and forged steel flanges have stabilized during the first quarter. No change is anticipated as we begin the second quarter of 2023.
Dan Kish, a distinguished senior fellow at the Institute for Energy Research, states that you can think of the Fed tightening as a supply constraint.
“As the cost to borrow money goes up, it affects capital-intensive industries, not only oil, but all infrastructure and renewable energy as well,” he explains. “As costs rise for projects, there will be less of them at the very time when the world needs more oil to help tamp down inflation. “In the longer run, if the Federal Reserve’s tightening leads to recession, that will reduce the demand for oil.”
Caution: With all the uncertainty prevailing in the oil and gas industry, the effects of the new taxes on oil and gas put in place in January, and the recent consolidation of suppliers, it is recommended that close contact with your manufacturers and suppliers be maintained. In doing so, you may avoid any surprises regarding pricing or the availability of pipe, valves, welding fittings and forged-steel flanges.
PVF Roundtable News
The PVF Roundtable Annual Golf Tournament is scheduled for May 8, 2023; key sponsors for the event, Weldbend and Ferguson, look forward to a record turnout. Details will be posted on the PVF Roundtable website (www.pvf.org) and in next month’s article.
The next Networking Meeting of the PVF Roundtable will be held May 9, following the golf tournament, at Houston’s The Bell Tower on 34th. It commences at 4 p.m. CDT and closes by 7:30 p.m. CDT.
The Feb. 21 inaugural table-top event, “Commerce and Cocktail,” with industry suppliers hosting end-user attendance. The event was sold out and a resounding success.
To date, close to $2 million in scholarships have been distributed by the PVF Roundtable Charitable Foundation to universities and trade schools for the development of a skilled labor force for the PVF industry.
The PVF Roundtable golf tournament, the TroutBlast and the Weldbend-sponsored October dinner were the major fund-raising events held by the foundation during 2022, with the funds raised dedicated to the PVF Roundtable Scholarship Programs.
As a member of the board, and I speak for all members, we thank you for your participation in these events.
With the uncertainties in the current turbulent PVF market, the networking meetings are a unique venue for you and your associates to network with your PVF peers. These events provide the platform to share information, discuss pertinent issues, meet new contacts, develop long-lasting friendships and pursue new opportunities in the industry.