WASHINGTON (MNI) – The following is the second and final section of
the latest Beige Book’s survey of economic activity in the Fourth
District, published Wednesday:
Energy
Conventional oil and natural gas drilling and production were
fairly stable during the past six weeks, while activity in Marcellus and
Utica shales expanded. A few producers expect output from conventional
wells to increase in the upcoming months. Wellhead prices paid to
independent producers remain on a downward trend. Little change in coal
output is anticipated for the remainder of this year and into 2012. Spot
prices for coal increased slightly. Capital outlays are on target, with
moderate increases projected by oil and gas companies in the upcoming
months for drilling new wells. The cost of production equipment and
materials was flat during the past six weeks. Energy payrolls held
steady. Transportation. Overall, freight transport volume continued on a
slight upward trend, with increases seen in consumer products, including
furniture. Most of our contacts expect volume to grow at a slow, steady
pace in the near term. Although diesel fuel prices have moderated, a few
contacts noted that their companies still have a fuel surcharge in
place. Truck maintenance costs continued to rise. Two of our respondents
have successfully increased their shipping rates as customer contracts
came up for renewal. Capital outlays have accelerated during 2011
relative to prior-year levels. Spending is mainly to replace aging
equipment and to support demand growth from energy customers. One
executive noted that newer engines and class 8 trucks are increasing in
price, and that it is becoming more difficult to secure financing.
Hiring has been largely for driver replacement; however, we heard a
couple of reports about carriers adding capacity. 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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