Products of Petroleum and Coal, NEC

SIC 2999

Companies in this industry

Industry report:

This category includes establishments primarily engaged in manufacturing packaged fuel, powdered fuel, and other products of petroleum and coal not elsewhere classified. Products in this industry include calcined petroleum coke, regular petroleum coke, fireplace logs, fuel briquettes, or petroleum waxes, independently of petroleum refineries.

This small composite industry shipped $13.8 billion worth of products in 2008. Exports account for nearly one-third of the industry's output. More than a third of the nation's production was concentrated in the states of Pennsylvania, Texas, and California.

Plummeting crude oil prices in the late 1990s adversely affected this industry, which relies on oil as the source for petroleum production. On September 29, 1998, crude oil futures closed on the New York Mercantile Exchange at $15.98 per barrel, as compared to one year earlier, when they closed at $21.18 per barrel. The price had bottomed out in late 1997, falling to $11.58 per barrel. Whereas these low oil prices translated into cheap gasoline for consumers, it spelled trouble for this industry. Several events in the early 2000s, including the September 11, 2001, terrorist attacks, had an effect on crude oil prices, which fluctuated dramatically during this time period. Following consecutive years of costly hurricanes in 2004 and 2005, as well as continued conflict in the Middle East, an increasingly unpopular war in Iraq, and international criticism of U.S. foreign policy, crude oil prices reached the previously unimaginable level of $70 a barrel.

Raw materials for companies grouped in this area are procured from petroleum refineries or coal processors, and the goods produced are shipped either to distributors for the retail market or to other manufacturers. Solid packaged fuels, including fireplace logs and fuel briquettes produced by companies, are sold for general consumer use.

Petroleum waxes and coke are often lucrative side businesses generated by such leading U.S. oil refineries as ExxonMobil Corp. and the Royal Dutch Shell Group of Companies, which acquired Pennzoil Co. in the early 2000s. These firms are classified under SIC 2911: Petroleum Refining. Smaller firms that are primarily classified in this industry hold a relatively small market compared to the oil giants. Niche markets that demand specialty wax applications, however, require blending capacities that are regarded as too costly for major refiners to install and maintain.
Petroleum waxes, which include paraffin wax and petrolatum, are used primarily in paper manufacturing; both the manufacture of paper and the coating and impregnating of paper and paperboard for protective wrapping of foods require petroleum wax. In the manufacture of rubber tires, petroleum waxes serve as an anti-ozonant, while in PVC manufacturing the waxes serve as an internal lubricant. Paraffin wax is used in making candles, cosmetics, and pharmaceuticals. After increased imports in the late 1990s began to undermine U.S. manufacturing efforts, several petroleum wax makers shuttered operations and reduced capacity. In fact, between 1995 and 2001, U.S. capacity for petroleum wax declined 27 percent, to $2.5 billion.

A by-product generated from the thermal cracking of reduced crudes and residuums, petroleum coke serves as a domestic and industrial fuel. In its refined form, petroleum coke is used primarily for heating in the eastern United States, where most of its manufacturers are based. This fuel is also used in aluminum anodes, furnace electrodes and liners, carbonaceous pastes and cements, and various carbon and graphite products. Highly purified graphite derived from petroleum coke can be used for construction materials in nuclear plants.

The 129 establishments in this industry shipped 13.8 billion in products in 2008. Although petroleum-based waxes constituted 87 percent of global demand, plummeting production in the late 2000s and increasingly higher paraffin wax costs adversely affected this industry. Petroleum waxes have been losing ground in their key markets of paper and candles while substitutes, such as vegetable-based materials, were making inroads as consumers sought "greener products." At the close of 2007, total wax capacity was an estimated 2.4 billion pounds. U.S. petroleum-based wax producers continue to exit the industry, with nine remaining from 18 in 1990, with the total number of producers expected to drop further.

Industry leaders include Houston-based Schlumberger Ltd., with $27.1 billion in 2008 sales and 87,000 employees; Houston, Texas-based Apache Corp., with $12.3 billion in 2008 sales and 3,639 employees; and Salt Lake City-based Questar Corp., with $3.4 billion in 2008 sales and 2,457 employees.

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