As key inputs increase in price and demand rebounds, the price of oil and gas pipeline construction is forecast to grow.
Los Angeles, CA (PRWEB) September 01, 2014
Oil and gas pipeline construction has a buyer power score of 3.4 out of 5. This score represents strong buying power that stems from the low market share concentration and the declining prices during the past three years. “However, buyer power is weakened by the lack of substitutes available and the high level of price volatility,” according to IBISWorld business research analyst Ian Buchanan.
The market for oil and gas pipeline services has an estimated 2,100 suppliers, with no major vendors controlling the majority of market revenue, indicating a low market share concentration. The market is divided into a large number of small, local suppliers operating regionally, while a handful of larger suppliers provide their services nationally. The fragmented market contributes to high levels of competition among suppliers, which is beneficial to buyers because it incentivizes suppliers to offer reduced pricing and flexible contract terms to avoid being undercut by competitors. As a result, the low market share concentration provides buyers with greater buying power. However, the boost in buyer power is dampened slightly due to the lack of available substitutes for oil and gas pipeline construction. In order to effectively and efficiently transport excavated materials to a refinery, storage tank or any other location, pipelines must be constructed. “Knowing that buyers have no other options, suppliers gain stronger pricing leverage and buying power is limited,” says Buchanan.
In the three years to 2014, the price of oil and gas pipeline construction is expected to decline at an annualized rate of 1.7%, providing buyers with favorable purchasing conditions. The drop in price is largely a factor of reduced demand for new pipelines from oil and natural gas operations due to an excess in the domestic supply of these commodities. Additionally, the price of key inputs for suppliers has been declining during the past three years, allowing vendors to drop the price of oil and gas pipeline construction. Despite the drop in price of this service, prices have undergone high levels of volatility during this period. This hurts buyers because it indicates a high risk of price spikes and increases the difficulty of creating accurate budgets and cost estimations. Major vendors include Bechtel Corporation, CH2M Hill and EMCOR Group Inc. For more information, visit IBISWorld’s Oil & Gas Pipeline Construction procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of oil and gas facility pipeline construction services. Providers of these services build piping designed to transport oil and gas from one location to another. Suppliers in this market provide construction services for onshore pipelines, both above ground and below, and offshore pipelines. This report excludes pipeline maintenance services and cathodic protection services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.