Industry gurus prophesied the downward spiral of oil prices would be brought about by increased oil production activities resulting in oversupply worldwide. As this prediction came to life, the industry was unprepared for steep declines it witnessed in prices, leaving producers baffled, as oil prices dropped further from $80-90 per barrel to $30-40 per barrel.
The immediate consequences of volatile prices experienced were withdrawal of capital investments, reduced production activities, and major projects being deferred within the oil and gas industry affecting other industries reliant on these activities. Manufacturers of inventory tank gauges experienced significant reduction in demand for sensors, particularly those catering to the oil & gas verticals. The negative impact on their revenues has forced ITG suppliers to rethink their vertical market strategies rather than focusing on one particular sector.
Inventory tank gauges have come a long way, from old float and tape gauges to versatile non-contact radar-based technologies that are accurate, precise and reliable. With improved product design, increased safety measures such as SIL-Overfill protection and wireless solutions coming into the picture, the versatility of applications for which these gauges can be used has increased significantly. As contract values and profit margins are relatively higher within the oil and gas industry, suppliers have focused on targeting this industry since it has remained the most effective business strategy in the past. The recent downturn cycle the oil and gas industry is experiencing rendered this strategy ineffective. ITG suppliers are now forced to re-evaluate their age-old strategy of focusing solely on specific verticals to reduce their exposure to financial instability.
For more information on this topic, watch out for our upcoming report on Global Electronic & Mechanical Inventory Tank Gauge 2016 Report in July 2016. Please contact VDC Research for more information, subscription to our Industrial Automation & Sensor Practice.