PCA: low crude prices impact oil well cement consumption

PCA: low crude prices impact oil well cement consumption
09 February 2016

With oil prices having declined dramatically since mid-2014 due to a combination of global supply and demand issues, the implications for the US economy, as well as for cement consumption have been significant, writes the PCA. It cautions that if oil prices stay near US$30/bbl or lower several consequences to cement consumption could arise that would impact the fall forecast projections.

Given the complex nature of forecasting energy prices, PCA relies on projections from the Energy Information Agency (EIA). At the time of the PCA’s fall forecast, EIA’s 2016 projection for West Texas Intermediate oil price was nearly 30 percent higher than its current projection, and further reductions may be forthcoming.

In its latest Market Intelligence report, the PCA said: "Lower oil prices mean increased fuel savings (heating and automotive) for consumers. The positive economic impacts of these savings manifest unevenly throughout the rest of the economy and can be delayed at various rates; however, many analysts suggest that the oil price decline resulted in an increase of 20 to 40 basis points to the economy in 2015.

"The negative impacts of low oil prices, such as decreased drilling activity, generally occur more quickly. PCA estimates for every one ton of oil well cement lost from reduced drilling activity, 2.9 tons of cement consumption is lost from coincidental energy production construction,"

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Tagged Under: Consumption USA PCA oilwell cement