With 2017 closing, many industry leaders are looking to the future and pondering the changes coming to the U.S. economy and industry business. In the second quarter of 2017, Ed Lewis, CEO of Industrial Info Resources (IIR), reported the U.S. Gross Domestic Product (GDP) raised 3.17 percent.
"If you look at the stock market today, it is raging forward," Lewis told an audience of industry professionals at a 2018 Market Outlook event recently held in Baton Rouge, Louisiana.
Lewis was among the six IIR speakers presenting information on U.S. industries, specifically the power industry, oil and gas, natural gas and chemical processing. Michael Bergen, executive vice president of IIR, gave a "macroeconomic view" of past and current trends in U.S. industry and where things will head in the coming years.
"Before the election, there was a less optimistic view of where we would end up in this expansion period. As a matter of fact, if we had not changed parties, I would probably estimate that our downturn would come sooner than later, maybe even in 2018," Bergen said, referencing the 2016 presidential election and the change to a more conservative-led government.
Many economists and those researching industry trends had high hopes for the impact of the Trump administration's entrance.
"We had a lot of built-up optimism about which way this administration was going to take us," Bergen said, indicating that GDP has been adjusting downward. He added that 2017 would end in the low 2-percent range, which he called "business as usual."
Among industries experiencing an upward trend this past year were pipelines -- specifically production -- and chemical processing, with the most common projects being NGLs and LNG, Bergen reported. A number of LNG projects are expected to begin construction in the Gulf Coast area, including Corpus Christi and Sabine Pass, Texas, and Lake Charles, Louisiana.
The U.S. South region will represent over half of the $300 billion in spending forecast for 2018. Twenty-two percent of U.S. spending occurs in the Gulf Coast region alone. Bergen noted the U.S. dollar weakening creates more opportunity for manufacturing growth. "The weaker the dollar gets, the more attractive our products and services are across the world," he said.
Vice President of Power Industry Research at IIR Britt Burt spoke about newbuild projects and the impact they create on the economy. Many of these new builds include renewable energy projects, such as solar power, which are increasing in Texas and along the South.
"Certainly the power industry is not as active along the Gulf Coast as it is in some parts of the country, but there's still a healthy spend here," Burt said. He projected most of the new builds will consist of natural gas and renewable energy projects, which will continue to be the trend for a while.
Speaker Chris Paschall, IIR vice president of oil and gas research, presented economic trends in the oil and gas industry. In June 2014, oil was $100/barrel on a WTI (West Texas Intermediate) basis, and by February 2016, it dropped to $27, Paschall told the listeners.
"So there's not a lot of volatility in the crude oil market at the moment. Is it going to go higher? Absolutely, I think it will," Paschall said. "I think the price of oil will range in the $50-$60 range as we move into the 2018 timeframe."
He went on to say leading up to 2014, the demand for crude exceeded supply, but in the time since, supply has "outstripped" demand. Things are changing again, however. "We are starting to see the market doing a little bit of the shifting going along," he said. "We are starting a rebalancing act."
Paschall continued to express optimism moving into 2018, with oil production increases centered around the Permian Basin.
For ongoing industry updates, visit BICMagazine.com.