Petrochemicals expect no early relief in slump
Relief for the nation's hard-pressed energy and petrochemical industries appears to be at least a year and a half away.
And the strength of any rebound, analysts say, will be tied to at least three uncertain factors:
* Demand for petroleum-related consumer goods, such as cars and televisions.
* Political stability of the Organization of Petroleum Exporting Countries (OPEC).
* Depth of demand for natural gas and heating oil this winter.
For now, however, the oil, gas, and petrochemical industries are in one of the steepest declines in years. Last December there were 4,500 operating oil rigs in Texas. By September of this year that number had fallen to 2,500 and may drop even further, says Rick Berry, an oil analyst with Eppler Guerin & Turner in Dallas.
The drop in oil rigs is part of a cycle running from banks to farms to auto plants in the North and back to the gantlet of petrochemical plants that line the area around Port Arthur, Texas.
Hampering the industry are high interest rates and continuing recession, which has dampened demand for plastic goods and other petrochemical-related products.
In Texas, the center of much of the country's petrochemical industry, plants are operating at only 60 percent of capacity and oil refineries are not doing much better, at 70 percent. The entire industry is ''very depressed,'' says Howard Bonham, an energy analyst at Rauscher Pierce Refsnes Inc., a Dallas-based brokerage house.
Mr. Bonham says fertilizer is the hardest hit of the petrochemical families. Farmers have been hit very hard by the recession and are unable to make the investment in crops needed to support the fertilizer industry.
''It is no longer a matter of tilling the soil,'' Mr. Bonham says. ''Farmers are questioning the economic sense of having a farm, especially near large metropolitan areas where land prices are high. The fertilizer industry is going to take its lumps.''
Many older plants have been shut down and others have pared operations to cut costs. Layoffs seem to have leveled off, but recovery may yet be a ways off.
In other areas, the petrochemical outlook is only slightly better. Early orders for 1983 automobiles are running below estimate. This means chemicals needed to make plastic car parts and tires may not be needed.
Demand for consumer goods that require plastic castings - such as televisions - is also sluggish, further dashing hopes in the petrochemical industry. Moreover, the pace of exploration for one of the key building blocks for petrochemicals, oil, remains virtually at a standstill. Key sources of funding for exploration - banks, new stock, private investors, and internal cash - have been drying up.
One factor that could breathe new life into the overall production scheme is the weather. If, as some predict, this turns out to be one of the colder winters on record, then gas production and gas prices will rise, generating more money for energy exploration.
Mr. Berry, for one, sees production rising over the winter as more people turn up the temperature on their furnaces.
Part of the future of the Texas oil industry will be tied to the future of OPEC. If the cartel were to disintegrate, there could be a sharp downturn in oil prices followed by a price surge as the market adjusts to economic and political conditions in the Middle East.