The Economic Road Ahead - Petroleum Equipment Institute · PDF fileThe Economic Road Ahead ....
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Brian Beaulieu CEO The Economic Road Ahead Petroleum Equipment Institute
Transcript of The Economic Road Ahead - Petroleum Equipment Institute · PDF fileThe Economic Road Ahead ....
Brian Beaulieu CEO
The Economic Road Ahead
Petroleum Equipment Institute
First in Forecasts Since 1948
ITR Economics provides the best economic intelligence to reduce risk and drive practical and profitable business decisions.
Duration 2015 Forecast Result Accuracy
US GDP 18 $16.632 Trillion $16.442 Trillion 98.9%
US Ind. Prod. 17 108.3 (12MMA) 107.1 98.9%
Eur Ind. Prod. 15 100.4 (12MMA) 103.3 97.1%
Canada Ind Prod 17 361.2 (12MMA) C$351.2 97.2%
China Ind Prod 22 607.0 (12MMA) 598.3 98.6%
US Housing 17 1.090 Mils. Units 1.111 Mils. Units 98.1%
US Retail Sales 13 $2.248 Trils deflated $2.244 Trils deflated 99.8%
US Employment 21 147.7 Million 148.8 Million 99.3%
2015 Forecast Results
2
2
First in Forecasts Since 1948
Real Gross Domestic Product
Source: BEA 3MMA
10
12
14
16
18
20
10
12
14
16
18
20
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Sep-15 GDPCON 3MMA
3
First in Forecasts Since 1948
Raw Nov-14 1.4 Dec-14 1.5 Jan-15 1.5 Feb-15 1.4 Mar-15 1.5 Apr-15 1.3
May-15 1.3 Jun-15 1.6 Jul-15 1.6
Aug-15 1.5 Sep-15 1.7 Oct-15 1.6 Nov-15 1.7 Dec-15 1.7 Jan-16 1.7 Feb-16 1.6 Mar-16 1.7 Apr-16 1.5
May-16 1.5 Jun-16 1.9 Jul-16 1.7
Aug-16 1.7 Sep-16 1.9 Oct-16 1.7
3MMT
4.4 4.4 4.4 4.2 4.1 4.2 4.5 4.7 4.8 4.8 5.0 5.0 5.1 5.0 5.0 4.8 4.7 4.9 5.1 5.3 5.3 5.3
12MMT
18.0 18.2 18.4 18.6 18.8 19.0 19.2 19.4 19.7 19.8 20.0 20.2 20.3
12/12
26.7% 25.5% 25.2% 22.4% 20.0% 18.3% 15.4% 12.7%
3/12
15.9% 13.6% 13.6% 14.3% 14.6% 16.7% 13.3% 12.8% 10.4% 10.4%
Data Preparation
4
First in Forecasts Since 1948
Worldwide Rotary Rig Count to North America Rotary Rig Count
Source: Baker Hughes 12/12 Rates-of-Change
-38.6% -54.9% -60
-40
-20
0
20
40
60
-60
-40
-20
0
20
40
60
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
North America Worldwide
Worldwide North America
5
First in Forecasts Since 1948
Worldwide Rotary Rig Count
Source: Baker Hughes Thousands
-29.7% -38.6%
1.679 1
2
4
5
6
7
9
-100
-75
-50
-25
0
25
50
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMA R-O-C
3/12 12/12
3MMA 12MMA
6
First in Forecasts Since 1948
US Natural Gas Futures Commodity Prices
Source: WSJ Data Trends in US $
7
0
2
4
6
8
10
12
0
2
4
6
8
10
12
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
12MMA 3MMA
12MMA 12MMT Forecast 3MMA
First in Forecasts Since 1948
US Natural Gas Futures Commodity Prices
Source: WSJ Rates-of-Change
8
-150
-100
-50
0
50
100
150
-150
-100
-50
0
50
100
150
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
3/12 12/12 12/12 Forecast
9.3%
-17.5%
12/12
3/12
First in Forecasts Since 1948
US Crude Oil Futures Prices
Source: WSJ Data Trends, US $
9
0
30
60
90
120
150
0
30
60
90
120
150
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
12MMA 3MMA
12MMA 12MMT Forecast 3MMA
First in Forecasts Since 1948
US Crude Oil Futures Prices
Source: WSJ Rates-of-Change
10
-60
-40
-20
0
20
40
60
80
100
-60
-40
-20
0
20
40
60
80
100
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
3/12 12/12 12/12 Forecast
-4.9% -23.6%
12/12
3/12
First in Forecasts Since 1948
US Industrial Production to Gross Domestic Product
Sources: FRB, BEA Year-over-Year, Quarter-to-Quarter (3/12)
-6.8%
-2.9% -5.3%
-15.5%
-0.9%
-16
-12
-8
-4
0
4
8
12
-16
-12
-8
-4
0
4
8
12
'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
GDP US IP
GDP US IP
11
First in Forecasts Since 1948
US Total Manufacturing Production Index
Source: FRB 2012 = 100, Raw Data
105.2
30
50
70
90
110
130
30
50
70
90
110
130
'72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Manufacturing
12
1. Near –Sourcing 2. Technology 3. Capital vs. Labor 4. Energy 5. Consumer base
First in Forecasts Since 1948
2016 Global Manufacturing Competitiveness Index
Source: Deloitte Touche Tohmatsu Ltd and US Council on Competitiveness Index Score: 100 = High, 10 = Low
13
Rank Country Index Score 1 China 100.0 2 United States 99.5 3 Germany 93.9 4 Japan 80.4 5 South Korea 76.7 6 United Kingdom 75.8 7 Taiwan 72.9 8 Mexico 69.5 9 Canada 68.7 10 Singapore 68.4
2016 (Current) Rank Country Index Score 1 United States 100.0 2 China 93.5 3 Germany 90.8 4 Japan 78.0 5 India 77.5 6 South Korea 77.0 7 Mexico 75.9 8 United Kingdom 73.8 9 Taiwan 72.1 10 Canada 68.1
2020 (Projected)
• Talent is the most important driver of a country’s ability to compete on the global stage
• Cost competitiveness is the second most influential driver
First in Forecasts Since 1948
Real Gross Domestic Product
Source: BEA 3/12 Rate-of-Change
-8
-4
0
4
8
12
16
1950 1960 1970 1980 1990 2000 2010 2020 Republican Democrat GDP 3/12
14
First in Forecasts Since 1948
US States Renamed for Countries with Similar GDPs
Data Sources: BEA; IMF 15
First in Forecasts Since 1948
24.5%
15.0%
5.6% 4.6% 3.9% 3.3%
2.9% 2.5%
2.4% 2.1%
1.9% 1.8%
1.7% 1.6% 1.6% 1.2% 1.0% 1.0%
0.9% 0.9%
19.6%
United States
China
Rest of World
Japan
Australia
Percent of 2015 World GDP by Country
Source: IMF, *67% are IMF Estimated Figures 16
*Total 2015 World GDP: $73.171 Trillion, US$
First in Forecasts Since 1948
US World Primary Energy Consumption to US Primary Energy Consumption to China Primary Energy Consumption
Source: BP 12MMT, Billion tonnes oil equivalent
17
2.3 US
12.7 World
0
2
4
6
8
10
12
14
0
1
2
3
4
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
World US / China
2.9 China
First in Forecasts Since 1948
US World Primary Energy Consumption to US Primary Energy Consumption to China Primary Energy Consumption
Source: BP 12MMT, Billion tonnes oil equivalent
18
2.6%US 2.0% World
-5
0
5
10
15
20
-5
0
5
10
15
20
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
4.9% China
First in Forecasts Since 1948
US Crude Oil Futures Prices to US Industrial Production Index
Source: WSJ, FRB 12/12 Rates-of-Change
19
-15
-10
-5
0
5
10
15
-90
-60
-30
0
30
60
90
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Oil Prices Oil Prices Forecast US IP US IP Forecast
All economic indicators used in this analysis are shifted along the horizontal axis to reflect their timing relationship to Crude Oil Futures Prices sales and provide a rough projection of the possible course of company sales going forward.
US IP Oil Prices
First in Forecasts Since 1948
US Industrial Production to ITR Leading Indicator™
Sources: FRB, ITR Economics USIP – 12/12 Indicator - Monthly
-15
-10
-5
0
5
10
15
-15
-10
-5
0
5
10
15
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Indicator US IP
Indicator - Monthly US IP - 12/12
20
Reported in ITR Trends Report – ITR Advisor
First in Forecasts Since 1948
US Crude Oil Futures Prices to ITR Leading IndicatorTM
Sources: WSJ, ITR Economics Rates-of-Change
21
-15
-10
-5
0
5
10
15
-90
-60
-30
0
30
60
90
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Oil Prices Oil Prices Forecast Indicator
Indicator Oil Prices
12/12 Monthly
First in Forecasts Since 1948
US Purchasing Managers Index
Source: Institute for Supply Management 1/12 Rate-of-Change
3.0
-50
-25
0
25
50
75
-50
-25
0
25
50
75
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
1/12
22
As seen in
First in Forecasts Since 1948
Nondefense Capital Goods New Orders (excl. Aircraft) to Manufacturing Capacity Utilization
Sources: Census Bureau, FRB Rates-of-Change
-30
-20
-10
0
10
20
30
-30
-20
-10
0
10
20
30
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
New Orders New Orders Forecast Utilization Rate
Utilization Rate
New Orders
1/12 12/12
23
First in Forecasts Since 1948
US Crude Oil Futures Prices to US Nondefense Capital Goods New Orders (excluding aircraft)
Sources: WSJ, Census Bureau 12/12 Rates-of-Change
24
-30
-20
-10
0
10
20
30
-90
-60
-30
0
30
60
90
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Oil Prices Oil Prices Forecast New Orders New Orders Forecast
New Orders Oil Prices
First in Forecasts Since 1948
US Industrial Production Index to US Owner Occupied Housing Inventory
Sources: FRB, Census Bureau 12/12 Rates-of-Change
-6
-4
-2
0
2
4
-15
-10
-5
0
5
10
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18
US IP US IP Forecast Inventory
Inventory US IP
25
First in Forecasts Since 1948
US Industrial Production Index to Wilshire Total Market Cap
Sources: FRB, Yahoo Finance Rates-of-Change
-60
-40
-20
0
20
40
60
-15
-10
-5
0
5
10
15
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18
US IP US IP Forecast Wilshire
Wilshire US IP
3/12
12/12
26
First in Forecasts Since 1948
S&P500 Stock Prices Index
Source: Wall Street Journal Data Trends
0
400
800
1200
1600
2000
2400
0
400
800
1200
1600
2000
2400
1980 1985 1990 1995 2000 2005 2010 2015 2020
Raw
12MMA
27
First in Forecasts Since 1948
Retail Sales
Source: US Census Bureau 12/12 Rates-of-Change
13.2 6.8
6.6 4.5
4.4 4.0
3.2 2.0
0.7 0.5
0.0 -0.5
-6 -3 0 3 6 9 12 15
Online Retailers
Health and Personal Care Stores
Bldg Materials, Garden, Supplies
Light Vehicle Sales
Furniture Stores
Sporting Goods
Beer, Wine & Alcoholic Beverage
Grocery Stores
Automotive Parts Stores
Clothing Stores
General Merchandise Stores
Jewelry Stores
28
First in Forecasts Since 1948
US Retail Sales Excluding Gas Stations (deflated)
Source: Census Bureau Trillions of Dollars
2.8% 3.4%
2.107
1.0
1.5
2.0
2.5
3.0
3.5
4.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMT R-O-C 3/12
12/12
3MMT 12MMT
29
First in Forecasts Since 1948
US Housing Starts to US New Homes Sold
Source: Census Bureau 12/12 Rates-of-Change
7.5% 11.1%
-60
-45
-30
-15
0
15
30
45
-60
-45
-30
-15
0
15
30
45
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Homes Sold Housing Starts
30
First in Forecasts Since 1948
U.S. Dependence on Foreign Oil Declining Net imports as a share of domestic consumption
Source: Energy Information Administration 31
60.4% 59.9% 58.2% 57.0% 51.5% 49.2%
44.7% 40.0%
32.9% 26.6% 24.0%
0%
10%
20%
30%
40%
50%
60%
70%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
First in Forecasts Since 1948
US Consumption of Crude Oil & Petroleum Products to Real Gross Domestic Product
Sources: EIA, BEA Data Trends
6
10
14
18
0.4
0.5
0.6
0.7
1985 1990 1995 2000 2005 2010 2015 2020
GDP Trils C2009$
Oil Bils Barrels
Oil Consumption - Raw Data GDP - 3MMA
32
First in Forecasts Since 1948
US Crude Oil Production
Source: EIA Millions of Barrels per Day
8.7
3
4
5
6
7
8
9
10
11
3
4
5
6
7
8
9
10
11
33
First in Forecasts Since 1948
US Crude Petroleum and Natural Gas Extraction Production Index
Source: FRB 2012 = 100
-7.6% -3.5%
131.3
60
100
140
180
220
260
-30
-20
-10
0
10
20
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMA R-O-C
3/12 12/12
3MMA 12MMA
34
First in Forecasts Since 1948
Mexico Oil & Gas Mining Production
Source: Mexico National Institute of Statistics and Geography 2008 = 100
-5.4% -3.6%
82.0 75
95
115
135
155
175
-30
-20
-10
0
10
20
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMA R-O-C
3/12 12/12
3MMA 12MMA
35
First in Forecasts Since 1948
Canada Oil and Gas Extraction
Source: Statistics Canada Billions of 2007 Chained Canadian dollars
-3.7% -0.1%
100.1
75
85
95
105
115
125
135
-20
-15
-10
-5
0
5
10
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMA ROC
12/12 3/12
12MMA 3MMA
36
First in Forecasts Since 1948
-30
-20
-10
0
10
20
30
-90
-60
-30
0
30
60
90
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Oil Prices Oil Prices Forecast S.A. Oil Production S.A. Oil Production Forecast
S.A. Oil Production Oil Prices
US Crude Oil Futures Prices to Saudi Arabia Oil Production Index
Sources: WSJ, IMF 12/12 Rates-of-Change
37
First in Forecasts Since 1948
US Crude Oil Inventories Since January 2014
Source: EIA
200
300
400
500
Jan 2014 May 2014 Sep 2014 Jan 2015 May 2015 Sep 2015 Jan 2016 May 2016 Sep 2016
US Commercial Crude Oil Inventories
Million Barrels
38
First in Forecasts Since 1948
US Natural Gas Futures Commodity Prices to US Natural Gas Total Underground Storage Volume
Sources: WSJ, EIA Rates-of-Change
39
-30
-20
-10
0
10
20
30 -90
-60
-30
0
30
60
90
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Natural Gas Natural Gas Forecast Storage Vol.
Storage Vol.
Natural Gas
Inverted scale
First in Forecasts Since 1948
Weekly Oil Price & Rig Count
Sources: EIA, Baker Hughes Rigs: Weekly Count WTI: Average Weekly Price
432
$49.52
$0
$20
$40
$60
$80
$100
$120
0
250
500
750
1000
1250
1500
1750
Jan 2014 May 2014 Sep 2014 Jan 2015 May 2015 Sep 2015 Jan 2016 May 2016 Sep 2016 Jan 2017 May 2017
USD/bbl Rig Count
Oil Rigs
WTI Price - Shifted 13 Weeks
40
First in Forecasts Since 1948
US Horizontal Rotary Rigs
Source: Baker Hughes Units
-43.3% -54.5%
427.3
0
500
1000
1500
2000
-360
-240
-120
0
120
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMA R-O-C 3/12
12/12
3MMA
12MMA
41
First in Forecasts Since 1948
US Crude Oil Futures Prices to North American Rotary Rig Count
Sources: WSJ, Baker Hughes 12/12 Rates-of-Change
42
-90
-60
-30
0
30
60
90
-90
-60
-30
0
30
60
90
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Oil Prices Oil Prices Forecast Rig Count Rig Count Forecast
Rig Count
Oil Prices
First in Forecasts Since 1948
US Crude Oil Futures Prices to US Natural Gas Futures Commodity Prices
Source: WSJ 12/12 Rates-of-Change
43
-90
-60
-30
0
30
60
90
-90
-60
-30
0
30
60
90
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Oil Prices Oil Prices Forecast Nat. Gas Prices Nat. Gas Prices Forecast
Nat. Gas Prices Oil Prices
First in Forecasts Since 1948
Net Electricity Generation from Natural Gas
Source: EIA Trillions of kwh
44
8.6% 12.7%
1.4
0
1
2
3
4
5
-60
-40
-20
0
20
40
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMT R-O-C
3/12 12/12
3MMT 12MMT
First in Forecasts Since 1948
US Commercial Sector Total Energy Consumption
Source: EIA Quadrillion btu
45
0.6% -2.2%
17.7
13
17
21
25
29
-30
-20
-10
0
10
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMT R-O-C 3/12
12/12
3MMT 12MMT
First in Forecasts Since 1948
US Industrial Sector Total Energy Consumption
Source: EIA Quadrillion btu
46
-3.2% -2.8%
30.7
27
31
35
39
43
-30
-20
-10
0
10
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMT R-O-C
3/12 12/12
3MMT
12MMT
First in Forecasts Since 1948
US Transportation Sector Total Energy Consumption
Source: EIA Quadrillion btu
47
3.0% 2.4%
28.1
21
28
35
42
-20
-10
0
10
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMT R-O-C
3/12
12/12
3MMT 12MMT
First in Forecasts Since 1948
US Residential Sector Total Energy Consumption
Source: EIA Quadrillion btu
48
2.1%
-4.9%
20.0
15
20
25
30
35
40
45
-40
-30
-20
-10
0
10
20
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMT R-O-C
3/12 12/12
3MMT 12MMT
First in Forecasts Since 1948
US Consumer Price Index to US Producer Price Index
Source: BLS 1/12 Rate-of-Change
1.5% -0.1%
-10
-5
0
5
10
-10
-5
0
5
10
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Consumer Price Producer Price
49
First in Forecasts Since 1948
Employment – Private Sector
Source: BLS Annual Data Trend
50
85
95
105
115
125
85
95
105
115
125
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Employment Mils of Jobs
Private Sector Employment Growth Job Openings Involuntary Part Time Employment Quit Rate – Rising
8.8% C 2.1% C
-9.0% A
First in Forecasts Since 1948
Millennials: US Population Distribution by Age, 2013
Source: The Council of Economic Advisers 51
First in Forecasts Since 1948
US Overall Wage Growth
Source: FRB Atlanta Percent
0
1
2
3
4
5
'06 '08 '10 '12 '14 '16 '18 '20
Raw Data
52
First in Forecasts Since 1948
Mortgage Rates to Federal Funds
Sources: Federal Reserve Board, WSJ Raw Data
-2
2
6
10
14
18
22
-2
2
6
10
14
18
22
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Mortgage Rates
Federal Funds
53
First in Forecasts Since 1948
National Defense Expenditures to Defense Capital Goods New Orders
Source: Bureau of Economic Analysis, US Census Bureau 12/12 Rates-of-Change
-45
-30
-15
0
15
30
45
60
75
-12
-8
-4
0
4
8
12
16
20
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Orders Expenditures
Expenditures Orders
Reagan Bush Clinton Bush Carter Obama
54
First in Forecasts Since 1948
Depression Drivers
55
• Demographics
• Inflation
• Health Care Costs / Entitlements
• US National Debt
Source: Census Bureau
Income by Household % in 1967 % in 2015 Less than $35,000 38.7% 32.1% $35,000 to $200,000 60.3% 61.8% Over $200,000 1.0% 6.6%
Household Distribution by Income Level
Source: Census Bureau
56
38.7% 32.1%
60.3% 61.8%
1.0% 6.6%
0
10
20
30
40
50
60
70
1967 1972 1977 1982 1987 1992 1997 2002 2007 2012
Percentage
$ 0 - 35k $ 35k - 200k $ 200k +
2015
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