Take A Look At The Positive Side Of The Downturn

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While everyone is talking about how the downturn has adversely impacted the oil and gas industry, resulting in cost-cutting measures, very few have looked at the positive side of the downturn. The low oil and gas prices has bolstered the economy, providing a necessary boost to the manufacturing industry in the US. In addition, the cost-cutting strategy of oil and gas companies will also force them to innovate and come up with better ways of doing business and become more resilient to the market forces. Read on to learn more about the positive aspects to the downturn.

Low Oil Prices – A Boon For Manufacturing Industry

Businesses and households are enjoying the benefits of low energy prices, leading to growth in business and cost-savings that are re-directed to retail spending. The manufacturing sector will continue to see growth and an increase in jobs, helping the U.S. to compete with China for its manufacturing business. In addition energy-intensive industries are able to maintain profitability by taking advantage of the low energy costs. This puts them at a greater advantage than their counterparts in other countries.

Bernard L. Weinstein said in a recent article:

“Natural gas, diesel and gasoline prices have dropped dramatically, significantly lowering energy costs for households and businesses. But most beneficial to manufacturers has been the falling cost of electricity, much of it now generated by natural gas turbines.

Energy-intensive industries like steel, aluminum, paper and petrochemicals are now enjoying power costs 30 to 50 percent lower than their foreign counterparts.”

Technical Innovations To Make The Oil And Gas Industry Resilient

The downturn provides an opportunity for the oil and gas industry to get smarter and come up with technical innovations that can improve productivity. These innovations will help the oil and gas industry to become resilient to the ups and downs in oil prices in the global market.

Wouter van Kempen, chairman and CEO of Denver-based DCP Midstream Partners LP (NYSE: DPM), the biggest natural gas processor in the United States said in a recent news article:

“Down cycles create great opportunities, and we’re going to come out of this smarter and fitter. The technical innovations that are coming out of this will be tremendous. We are innovators and we’ll find new ways to get product to the markets,” van Kempen said during the opening panel of the COGA-presented summit ( website here) at the Colorado Convention Center.

This article takes a look at the positive side of the downturn. It is important to remember that the boom and bust in the oil and gas industry is cyclical and that the industry will recover soon. In the meanwhile, it is a good idea to take a look at the bigger picture and find out how the downturn is affecting the U.S. economy and the manufacturing sector in particular.