January 2021 Vol. 76 No. 1
Editor's Log
2021: A Return to Normalcy?
By Robert Carpenter, Editor-in-Chief
As we roll into 2021, I yearn for a return to sanity as does most of our industry. For Underground Construction, 2021 represents more than just an escape from 2020; we will be celebrating our 75th anniversary. We’ve got many activities planned that will share memories and landmark accomplishments of the underground infrastructure industry over the past 75 years. We also eagerly anticipate what the next 75 years will bring as there is no doubt, the future is underground. See page 14.
This column marks my annual venture into precognition – or at least an educated guess – at forces shaping the underground infrastructure markets in 2021.
Telecom – Through the challenges, trauma and tragedy that earmarked 2020, opportunity has also arrived in this new year. Many businesses in the underground construction and rehabilitation industries have chosen that path of potential and growth. Others have simply had the good fortune to be involved in the right market at the right time. Those involved in telecom, for example, can thank their lucky stars as that business was a bright and shining star, even in 2020 and certainly for several years to come.
This pandemic has driven home that broadband availability – make that fast, fiber internet access – is critical to our current and future culture. It is the new, invaluable utility similar to the telephone landlines of yesteryear. Increasingly, our lives depend upon broadband services for virtually everything we do. In 2020, telecom contractors have continued working at impressive levels and should do so for the next few years.
Then there are oil and gas pipelines, already under attack in 2020, and now under siege in 2021. As long as there is a glut of oil and gas, economic headwinds slow growth. And that’s before the all-out war being waged by a mixed bag of environmental zealots, combined with a new wave of political neophytes and established politicians playing the climate card as their ticket to success.
Until we are able to re-establish that gas is a safe, environmentally friendly bridge to get us through the next 30-to-50 years, while other viable alternatives are developed or discovered, even gas growth will be struggling. The irony is that oil is still vitally needed for many purposes other than energy, and that gas is plentiful (read cheap) and environmentally friendly.
Most experts believe 2021 will be a slow year for energy pipelines, though there still will be a stronger market than most people expect, mainly in shorter distances and smaller diameters. Politics will dictate the near-term future of the oil and gas industry until world markets recover and start growing oil and gas appetites again to sustain their economies. In short, it will probably be 2022 or even 2023 before pipelines rebound to a stronger market position and even then, that future remains a bit tentative – but with any luck, not elusive.
Gas distribution, on the other hand, should be steady – not a boom market, but nonetheless, a solid market – in 2021. So many pipelines have already been built and additional capacity is available for distribution systems all over the country in markets crying for cheap, efficient energy. As the economy recovers in 2021, gas distribution is the primary answer for power generation. Alternative fuels are still struggling to gain a viable market foothold and becoming technically and practically sustainable and capable of supporting a larger share of our energy needs. Gas is clearly the answer – for the next few decades, despite what some predict.
Electric – Stable is the best way to describe that market right now. There is a lot of interest, energy and dollars being invested to continue moving electric lines underground, even in a slow economy. As the economy does improve, underground power lines – even transmission – is the direction electric utilities are increasingly favoring. Plus, the electric grid is still under a repair, replace and upgrade mode, so construction activities continue.
Sewer and water – In 2020, sewer and water systems nationwide will lose $27 billion. With factories, retail stories and office buildings all shutting down, either completely or in a very limited basis over a 10-month period, the use of sewer and water services dropped like a rock … ergo, user fee funding took a major hit. Also, while Amazon and other online retailers have profited greatly during COVID, local and regional business were shut down … ergo, sales tax revenue went spiraling downward. So, between a drop in user fees and sales tax revenue, cities are hurting in 2020.
Municipal projects will slow accordingly in 2021 until regular consumption patterns are reestablished, but not by much. City systems in general are in poor condition and any substantial delays in efforts to repair, replace and rehabilitate will be disastrous in the long term. A steadily recovering dynamic for sewer/water systems bodes well for renewed growth, sooner rather than later. Municipalities are expecting increased spending in the second half of 2021.
Most would agree that 2020 is perhaps a year best forgotten. Yet, 2021 emerges as a year of hope, especially with COVID-19 vaccines now abundant, people and businesses opening back up and just maybe, an accelerated return to normal.
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