Rebounding economic activity will continue to drive demand for oil and gas projects, fueling prices of engineering services, albeit at a slower rate
Los Angeles, CA (PRWEB) October 18, 2014
Oil and gas engineering services have a buyer power score of 3.1 out of 5, which indicates moderate purchasing power for buyers. The market is highly fragmented, with a large number of small- and medium-size engineering and consulting firms. As a result, price-based competition has intensified among smaller suppliers, aiding buyer negotiation power. Also, vendors are financially stable, which minimizes risk for buyers. “Furthermore, although the price of oil and gas engineering services is expected to grow in the three years to 2014, price volatility has remained moderate, providing some relief to buyers,” according to IBISWorld business research analyst Agiimaa Kruchkin.
The steady growth in the price of oil and gas engineering services was facilitated by the limited availability of substitute services, which makes demand largely inelastic. However, the intensifying competition among small- and medium-size suppliers typically prevents them from rapidly raising prices, benefiting buyers. Suppliers' input costs have subsided slightly during the period and have had little impact on pricing. As such, price growth for oil and gas engineering services was largely driven by external demand drivers in the three years to 2014. Industrial production has picked up significantly following the recession, driving demand for oil drilling and gas extraction activities. “Additionally, electric power consumption began rebounding after the recession, raising the need for oil and gas engineering projects,” says Kruchkin.
During the past three years, the hourly fees for oil and gas engineering services recovered particularly quickly among the largest suppliers, as the recovering economy channeled demand to suppliers with the greatest expertise in the field. Consequently, buyer power declined slightly in the period. Demand for oil and gas engineering services is anticipated to continue rising in the next three years, favoring suppliers and hurting buyers. Nonetheless, prices are expected to rise at a slightly slower rate in the three years through 2017; therefore, buyer power is anticipated to remain stable. Major vendors include Fluor Corporation, Bechtel Corporation and URS Corporation. For more information, visit IBISWorld’s Oil & Gas Engineering Services 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 engineering services. Suppliers of oil and gas engineering services help buyers plan and optimize operations; oversee equipment design, engineering and planning; oversee the installation, operation and maintenance of oil fields; develop plans to drill in oil and gas fields; and use computer-controlled drilling to connect a larger oil or gas deposit to a single well, among other services. Operators primarily provide services to oil and gas pipeline construction firms, oil and gas field service providers and oil drilling and gas extraction operators. This report excludes mining engineering 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
About IBISWorld Inc.
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.