Introduction – Page 2

Several critical elements worked together in Agrawal’s favor as he began his quest to get the fledgling company off the ground. During 1978, Agrawal’s firm went through a reorganization that involved a transformation from consulting to manufacturing and fabricating business. The company had booked enough substantial work to allow Agrawal to bring in key people on a full-time basis. As a result, PT&P had a new sense of direction and the people to enable the firm to compete in the market place. In addition, the timing and the location for this venture—in the midst of the 1970s oil boom in Houston, Texas—could not have been better. In order to understand the significance of PT&P’s success and survival and to place the story of the company in its proper historical setting, it is useful first to examine briefly the backdrop for the endeavor, the economic climate of post-war Houston.

During the years immediately before World War II, Houston’s oil, gas, and petrochemical industries began to thrive. By the end of the war, these industries expanded to such an extent that the city became known as the “energy capital of the world.” Because of its close ties to the oil industry, Houston was able to avoid the severe economic downturns that plagued other regions of the country during the post-war years. The phenomenon was due to the counter-cyclical upswings that the oil or energy-based sector experienced just as other areas of the economy went into their slumps. One of the best examples of this occurred during the early 1970s. Just as the national economy began to experience a major recession, the Arab oil embargo in 1973 brought a huge increase in oil prices that gave Houston’s economy an immediate boost. Crude oil prices shot up—quadrupling in just 90 days. With the price of oil closing in on $38 a barrel, the search for oil—which had become prohibitively expensive due to low oil prices—became economically feasible once again. The increase in oil prices stimulated an increase in oil exploration and drilling. The domestic oil rig count—a barometer of oil field exploration activity—rose from around 1,000 active rigs to 1,472 in 1974, 1,660 in 1975 and over 2,000 in 1977. When oil prices increased again in 1979, the rig count jumped again climbing to 4,250 by the end of 1981.1 Although the rising oil prices deepened the national recession, the initial impact proved beneficial to Houston-based manufacturers. The firms that produced oil field equipment and supplies along with those who provided oil field services and energy technology saw a huge leap in revenues. The ripple effects of the new energy boom quickly spread throughout the Houston economy. Among the beneficiaries of the boom were those companies that provided products like pipe supports, pipe hangers, and expansion joints for the downstream sector of the energy industry—oil refineries and petrochemical factories—including Piping Technology & Products.

During Houston’s fabled economic boom of the 1970s and early 1980s, the city experienced tremendous growth in population, employment, and income. In 1981 the population grew 7.2 percent, employment rose 8.4 percent, including 167,000 new jobs in oil field equipment manufacturing, and personal income shot up an incredible 19.9 percent. Since all these occurred during the time of a sagging national economy, it appeared certain that Houston was experiencing yet another of the city’s historical counter-cyclical booms. Oil prices continued to rise and many experts confidently spoke of benchmark surpassing $50 per barrel. All of this led city officials and business leaders to believe that the prosperity would continue into the foreseeable future, bringing economic growth and expansion during the rest of the decade.3