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Industry Lowdown
Anne Law

Industry Lowdown: Energy and Utilities Sector

by Anne Law | Dun & Bradstreet Editor

March 1, 2016 | No Comments »

Take a look at some of the trends, challenges, and opportunities from industry profiles updated by D&B First Research editors in recent weeks, with a focus on the Energy and Utilities Sector.

Trend: Petroleum Refiners Cutting Output
Faced with slowing demand and pressure on margins, at least five US oil refiners are voluntarily cutting gasoline and distillate production, according to Reuters. After cheap oil and surging gasoline demand led to near-record profits, the refiners are facing seasonally low demand and record stockpiles. The US Energy Information Agency expects global liquid fuel consumption to be lower in 2016 than it was the year before. The refiners’ production cuts come in addition to the seasonal slowdowns common in the first quarter of the year.

To learn more about this and other industry trends, see our Petroleum Refining report.

Trend: Biofuel Makers Pursue Nonenergy Product Lines
Facing tough competition because of low oil prices, many biofuel producers are diversifying into new product lines. Companies including Solazyme and Amyris are making and marketing products such as algae-based cooking oils, ice creams, and lotions, as well as yeast-based perfumes and household cleaners. Along with low prices for competing fossil fuels, delays in enforcing mandates for increased biofuel use have hurt producers, according to The Wall Street Journal.

For more trends, see our Biotechnology Product Manufacturing and Biofuel Manufacturing profiles.

Challenge: Global Water Crises Pose Risks for Utility Companies
Severe water shortages caused by climate change, population growth, and economic development face the utilities industry around the world. The World Economic Forum’s Global Risks report for 2016 lists water crises in the top three of all global risks. Global water demands could exceed sustainable supply by 40% in just 15 years, with about two-thirds of the global population facing severe water shortages at least one month every year, according to The New York Times. To help address the shortage, water and sewer utilities need to implement better water governance plans.

Find more information in our Water & Sewer Utilities industry report.

Trend: Slump in Oil Prices Could Lead to Rise in Bankruptcies
As many as one-third of US oil and gas producers may seek bankruptcy protection by mid-2017 if oil prices remain near current levels, according to a forecast by Wolfe Research reported by The Wall Street Journal. A host of factors, from China’s economic slowdown to the dollar’s rise to producers themselves continuing to flood the market, have pushed oil prices lower and lower since mid-2014. Prices below $40 per barrel are viewed as unsustainable for the vast majority of US operators, especially those with significant debt loads.

See our Oil & Gas Exploration & Production report for more on this and other industry trends.

Opportunity: Huge Growth in Wind Power Expected after Tax Credit Extension
Leading US wind power producers are breathing a sigh of relief following the extension of federal tax credits for alternative energy. Industry officials expect the extensions to support billions of investment dollars in renewable energy projects. The tax breaks, along with increased demand for low-carbon fuel sources, have helped wind energy companies lower the cost of turbines by two-thirds and quadruple wind power generation capacity (from 16,700 to 70,000) between 2008 and 2015, according to the American Wind Energy Association.

For more insight, see our Wind Power Generation industry profile.

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Where can you find First Research content? Visit our stand-alone site, our add-on to a Hoover’s subscription, and other select D&B products. In a hurry? Our call-prep sheet is a popular way to quickly get up to speed on an industry.

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Anne Law has been a member of the D&B editorial department for more than a decade, providing content for the Hoover’s and First Research products. She currently covers the health care and insurance industries for First Research. For industry news, follow Anne on Twitter.

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