Continued:
Energy
Conventional oil and natural gas production held steady during the
past six weeks, with little change projected in the upcoming months.
Wellhead prices for natural gas rose slightly. Drilling rigs are
migrating from other states to Ohio to take advantage of the
higher-priced wet gas found in the Utica shale. To date, 375 permits
have been issued in Ohio for drilling horizontal shale gas wells. Thirty
wells are now producing, with 50 expected to be in production by years
end. Coal producers reported production declines in 2012 of between 10
and 50 percent over prior-year levels due to lower demand from electric
utilities and a stricter regulatory environment. Reports of idled mines
are widespread. Spot prices for export metallurgical coal declined
further, while domestic steam coal prices rose slightly due to tight
supplies. Production equipment and materials prices were flat in most
categories, other than for diesel fuel. Capital outlays remain at
projected levels. Several coal operators announced layoffs. In Ohio, a
regulatory agency more than doubled its employment size over the past 12
months to cope with expanding shale gas activity.
Freight Transportation
Reports on freight transport indicated that volume is returning to
normal trends after a second-quarter slowdown. Industries which
contributed to the pickup include automotive, construction, and shale
gas. However, lower-than-expected harvests have negatively impacted
revenues for some carriers. Most of our contacts believe that their
companies growth objectives for 2012 will be met. Apart from fuel
prices, costs associated with truck maintenance held steady. Carriers
have successfully passed through higher diesel prices via a surcharge.
Reports on capital spending were mixed. Half of our contacts said that
2012 expenditures are on track. Others reported a slowdown or
postponement in purchasing new trucks, citing a sluggish economy,
uncertainty about the fiscal cliff, and difficulty obtaining financing.
Hiring is for replacement and adding capacity. Recruiting qualified
personnel remains difficult, which is contributing to wage pressures.
(2 of 2)
** MNI Washington Bureau: 202-371-2121 **
[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$]