Oil Price Declines: Boom or Bust?
The availability of abundant energy resources in North America is creating a structural economic advantage with a ripple effect across the nation, with a particular boost for regional manufacturing sectors.
What’s next for resource-intensive industries and how will they increase production and exports? This re-shoring of manufacturing creates demand for new logistics facilities that are resulting in growth in both jobs and GDP, but will slipping oil prices have an impact?
Leading up to I.CON ’15: The Industrial Conference, NAIOP sat down with Dr. Thomas Tunstall, research director at the University of Texas at San Antonio, Institute for Economic Development, to talk about his outlook and what industrial real estate can do to prepare and respond.
NAIOP: Will the decline in oil pricing harm manufacturing’s resurgence?
Tunstall: Oil prices may actually help the resurgence more than they harm it. For example, in my market of Corpus Christi, we saw a lot of natural gas-related projects as a result of its falling prices. With the increased export of condensates (ultra-light crude) and the prospect for regular crude export if Congress changes the rules, the landscape may improve even more.
NAIOP: What must the industry must do to prepare for and support the re-shoring of manufacturing?
Tunstall: Companies need to evaluate the long-term potential of the particular industry or opportunity. They have to be realistic about job estimates and ask the tough questions: Does the opportunity fit within the local economic development eco-system? How easy or difficult would it be for the company to move again somewhere outside the United States?
NAIOP: Beyond plastics, what industries are increasing in production and exports?
Tunstall: We are forecasting increases in oil-related industries across the board: natural gas, condensate (ultra-light crude oil), fertilizer, chemicals and refined products like gasoline, diesel fuel and jet fuel.
Join Tunstall and a panel of his peers as they discuss Trends to Watch: Beyond Cross-dock and E-commerce at I.CON ’15, June 10-11 in Long Beach, California. See the conference website for details on who attends, hot sessions, and project tours.
Kathryn Hamilton, CAE, is Vice President for Marketing and Communications at NAIOP Corporate.
Thanks for the great article. I look forward to more in the future.