AKRON—If your company makes products for the energy sector and isn't making money, it's time to look for a new field.
Today it's a gold-rush for companies that make and sell products for many energy sectors. But it's also a market that could go bust, or at least be hindered, down the road.
Today in the oilfield, the record high prices of oil, as well as oil feedstocks, make the tapping of “black gold” incredibly lucrative. The BP disaster has crimped offshore drilling to some extent, but the nation's insatiable appetite for oil means in the long run oil from the Gulf and elsewhere at sea will continue.
On land, it's “drill baby drill” in many states. If you make products for the oil industry, times are good.
Mining, too, is running hot, and demand for coal is positive news for conveyor belting makers.
The sector most on fire today, however, is natural gas.
Listen to the participants at the recent NAHAD hose distributors' conference in San Diego, and they can't talk enough about natural gas. The Marcellus shale formation that runs through much of the Appalachian Basin is so immense, some call the U.S. the Saudi Arabia of natural gas, sitting on the world's largest reserve.
Getting to natural gas means miles of hose must be used, and that has the NAHAD distributors—and the manufacturers of such hose—in clover.
That said, there's a large cautionary note to the natural gas heyday. Demand for natural gas and extraction of it are running ahead of government regulations. In this country, that's the usual case: the U.S. legislative and regulatory process is reactive, not proactive.
There are plenty of examples of what happens when there is a lack of regulatory oversight. The most recent case is what occurred in the free-market, “anything goes,” atmosphere with financial institutions and housing, which caused the Great Recession. Now, effective or not, there are a host of regulations concerning these segments.
The natural gas field is one big disaster away from a spate of regulations. If you're serving that field now, enjoy the ride. History has a way of repeating itself.