Shale energy exploration, the growing practice of deep horizontal drilling to harvest oil and natural gas previously beyond reach, has changed America's energy industry and overall economy. The fact that natural gas prices are at a ten-year-low is a strong indicator of this positive change. And in the areas where the actual drilling occurs– Ohio, Pennsylvania, Texas, Louisiana and North Dakota– there are even more direct economic impacts of what has been called the "shale boom."
Benesch, an Ohio based firm with nationally-recognized expertise in transportation law, recently collaborated with National Tank Truck Carriers (NTTC) in Washington, DC and the Ohio Trucking Association (OTA) in Columbus, Ohio to develop and execute a survey examining the shale boom's impact on trucking on both a national and state level. Members of each trade association were asked to complete a digital survey designed to explore the current status of trucking as it related to the oil and gas industry and expectations for the future. Surveys were sent to all members of each association, who are spread out geographically across the US and Ohio respectively.
"We decided to look at trucking because, as many economists will tell you, it is an important harbinger of economic vitality and change", says Richard Plewacki, a partner with Benesch's Transportation & Logistics practice, " Increases in trucking activity signal corresponding changes in manufacturing and industry. After all, you can't make or sell a product without transportation playing a key role in the process."
The Benesch / NTTC / OTA survey found shale activity is having a positive impact on the trucking industry, that this increase in opportunities and presumably profits is expected to continue and significant job growth will be a byproduct of the trend. The study also sought to identify possible obstacles to future growth in the transportation sector.
Some of the survey findings include:
- Huge optimism for positive shale impact:
97 percent of national respondents believe the shale boom will have a positive impact on the trucking industry.
91 percent of Ohio truckers believe the shale boom will have a positive impact on their business.
- Ohio has different worries for the future of shale economy than the rest of the nation
In Ohio, overly burdensome regulations– primarily mandatory hours of service limitations on truck drivers– are seen as the most significant barrier to capitalizing on shale opportunities. The recruitment and retention of qualified drivers and mechanics was a close second.
Nationally, the greatest barrier to capitalizing on shale opportunities in the trucking industry is the recruitment and retention of qualified drivers and mechanics. Nearly 47 percent sited this as their primary business worry.
It is interesting to note that hours of service (total shift time drivers may work before taking required rest periods) is a federal requirement of all commercial truck drivers.
So why did Ohio drivers cite hours of service, and regulation in general, as an impediment to future growth?
The answer may be oil field exemptions. Hours of service exist to keep tired (and, therefore, compromised) drivers from posing a danger on public roadways. Oftentimes drivers who haul supplies to oil and gas drilling sites are required to wait long periods of time at the site to either unload or load. This idle time is unavoidable. Therefore, oil field drivers get an exemption to the hours of service regulation. Several Ohio respondents reported they felt this practice was unfair in an open-ended portion of the Benesch survey.
Benesch is a full-service business law firm with offices in Cleveland, Columbus, Indianapolis, Philadelphia, White Plains, Wilmington and Shanghai. The shale oil & gas practice co-chairs are Orla E...
In the third quarter of 2012, GE Capital surveyed the CFOs of 500 U.S. middle-market companies across seven distinct industries to ascertain their views on the U.S. economy.
Compiled from State Maintenance Council Newsletters and Websites.