WASHINGTON (MarketWatch)—Lower oil prices are raising alarms outside the domestic energy sector, according to a summary of economic conditions released Wednesday.
The Beige Book, a collection of anecdotes about the economy, found growing concern among chemical companies, mining equipment and banks.
While drilling remained high, the energy sector was clearly concerned. “Firms located in the Gulf of Mexico were re-evaluating their operations and in Dallas, lower prices “weighed on the outlook for drilling activity.”
But in Texas, demand for legal services from oil and gas companies has slowed due to the uncertainty, the report said. And banks in Texas said they were braced for a possible slowdown in business.
Also see: Texas bank stocks dinged by drop in oil prices
Officials in North Dakota said they expected oil production to continue increasing over the next two years despite recent declines in oil prices, the Beige Book found.
Mining equipment sales were down, and chemical producers said they were now at a disadvantage because they used natural gas while their foreign competitors relied on oil.
Even with the drop in gasoline and diesel fuel prices, transportation costs rose in some districts where capacity constraints were an issue, the report found.
In a sign of the many conflicting ways that lower energy prices impact the economy, many contacts reported that lower gasoline prices were boosting consumer spending.
The Beige Book is based on information collected before Nov. 24. The report was prepared by the Chicago Fed staff, which scrapped the “moderate” and “modest” description for economic activity seen in many reports since the end of the financial crisis.