WASHINGTON (MNI) – The following is the latest Beige Book survey of
economic conditions in the Federal Reserve’s Fourth District,
published Wednesday:
Energy
Reports indicate that oil and natural gas drilling and production
showed little change during the past six weeks, with activity in
Marcellus and Utica shales continuing to grow. Wellhead prices paid to
independent producers have declined. Demand for coal is rising,
especially in overseas markets. However, due to transport issues and
increasing governmental oversight in permitting and environmental
compliance, production remained flat. Little change is anticipated for
the remainder of the year. Spot prices for coal, particularly steam,
moved slightly higher. Capital outlays are on target, with moderate
increases projected by oil and gas companies in the upcoming months. The
cost of production equipment and materials increased slightly since our
last report. A modest rise in payrolls by oil and gas producers was
reported. Transportation. Freight transport executives told us that
shipping volume expanded slightly, as the effects of supply chain
disruptions due to events in Japan and severe spring weather in the U.S.
dissipate. Expectations call for markets to continue growing at a modest
pace in the upcoming months. The price for diesel fuel remains elevated,
with most of the increase being passed through to customers via
surcharges. Capital outlays are expected to accelerate during 2011.
Spending is mainly to replace units that were in service longer than
expected. Hiring has been largely for driver replacement. However, we
heard a couple of reports that carriers are adding capacity, which
remains below pre-recession levels industrywide. Wage pressures are
emerging due to a tightening of the driver pool.
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** Market News International Washington Bureau: 202-371-2121 **
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