When looking at activity in the oil and gas sector, there's more than one way to interpret things. And both are distinctly different.
First is the traditional manner. How is the price of a barrel of oil trending, and what is the impact on the rubber and polymer component and material companies supplying the industry?
From that standpoint, the answer is much better than March and April of last year, with the price of crude oil up substantially. That translates to improved business for the rubber-related firms with a major stake in the sector, with reasons for optimism that those conditions will continue through 2021 and, hopefully, into 2022.
Of course, that's the short-term focus, and one that is necessary for those companies that make a living producing a variety of hoses, seals and other rubber goods for both the offshore oil rigs as well as the onshore oil and gas fracking wells situated in a variety of U.S. regions.
Then there's the long-term outlook of how an industry that depends on fossil fuels will be shaped years down the road, with the transportation industry speeding up the long march to one that relies on electric power, rather than the gasoline that feeds an internal combustion engine. To gauge the forecast from this perspective, it might be better to use a telescope rather than a microscope.
And those who keep tabs on plans to slash greenhouse emissions and who forecast when "net zero" may be achieved say 2020 may be seen as a watershed year. They say this because the pandemic caused a reset in terms of how much energy was used, and other factors contributed to what they see as a slow but definite step toward the future of energy.
Soaring oil prices
Rewind a year, and the oil and gas sector was looking down a double-barrel shotgun. First was an oil war involving Russia, Saudi Arabia and others that flooded the market with oil, driving down prices to precariously low levels.
That was followed by the start of the global coronavirus pandemic, which caused oil and gas usage to plummet just as the market was glutted with supply. Brent and WTI crude oil prices, at one point in April 2020, dipped below $10 a barrel, according to data from the U.S. Energy Information Administration.
While those prices were nice for motorists who were filling up at the pumps, they were disastrous for suppliers to the industry.
Crude oil prices began to recover through the rest of 2020, and they have skyrocketed since the start of 2021, with Brent crude near $70 a barrel and WTI around $65.