Detroit Free Press (MCT)
The surge in oil and natural-gas exploration is providing a welcome spark for pickup sales, taking up slack from a construction industry that remains in the doldrums.
The flip side of higher gas prices is that energy companies look for more oil, as well as its less expensive derivative, natural gas.
To be sure, a gradually improving economy and pent-up demand are drawing truck customers into the showroom.
“Every time we add a number of wells, we add a lease operator — and that requires a truck,” said Pat Gibson, vice president of Traverse City, Mich.-based West Bay Exploration, which has 12 to 14 people operating about 80 wells throughout the state.
“As production increases, you’re going to see more” wells and more truck sales, Gibson said. “In Michigan that’s still a small amount, but in places like Ohio and North Dakota and Pennsylvania, that’s significant.”
General Motors’ full-size pickup sales rose 14 percent in March compared with a year earlier as the Chevrolet Silverado posted a 12.1 percent increase and sales of the GMC Sierra jumped 19.2 percent.
Ford F-Series pickup sales rose 13.6 percent for the first quarter to 143,827.
Chrysler’s Dodge Ram sales were up 23 percent in March from a year earlier, while Toyota Tundra sales rose 10.3 percent.
The U.S. Energy Department’s Energy Information Administration said in its March energy outlook that crude oil production should increase from 5.6 million barrels per day in 2011 to 5.83 million barrels per day in 2012.
The EIA also said natural gas production reached a new monthly record of 2.577 trillion cubic feet in January, an increase of 11.6 percent from a year earlier and 16 percent above January 2009.
“It has stabilized around the core customer who really needs a truck, and many of those buyers have been waiting for the economy to recover before replacing their old vehicle,” said Don Johnson, GM’s vice president for U.S. sales.
Johnson said sales of heavy-duty trucks are particularly strong — and “a lot of that can be attributed to the oil and gas segment.” Other industries, including the telecommunications sector, are also stimulating truck demand.
The energy boom has flourished particularly in places like western North Dakota, where unemployment was at a national low of 3.1 percent in February.
The U.S. oil and gas extraction subsector added more than 26,000 jobs from March 2011 to March 2012, according to preliminary estimates by the U.S. Bureau of Labor Statistics. The industry employed about 193,100 last month, including geoscientists, petroleum engineers, pump system operators and wellhead pumpers.
Matthew Larsgaard, CEO of the Automobile Dealers Association of North Dakota, said pickups are essential for hauling equipment, pulling trailers, transporting fuel tanks and generators and carrying passengers to drill sites. Currently dealers don’t have enough trucks.
“It’s rough terrain out there,” he said. “You’re not going to drive around in a coupe or a sedan. Both the agricultural sector and the oil sector ... rely heavily on large trucks.”
Julia Bell, public affairs and communications coordinator for the Washington, D.C.-based Independent Petroleum Association of America, said independent oil and natural gas companies have an average of 12 employees and drill about 95 percent of new wells.
“The benefits of oil and natural gas development don’t end at the wellbore,” she said. “It goes well beyond the industry. It’s even going to the auto industry, for example.”
Travis Windle, spokesman for the Marcellus Shale Coalition, said the mountainous Appalachia region makes pickups a must for those looking for oil, gas or coal.
“Without any doubt there has been and continues to be steady, strong robust growth for truck sales across Appalachia, tied directly to natural gas development,” he said. “Accessing various sites where drilling operations are under way requires four-wheel drive — trucks in many cases.”
Johnson said he could not pinpoint exactly where the oil and gas industry is buying the most pickups, although “it’s more out West obviously.”