The oil industry, from drilling and exploration, to equipment and petrochemial plants, is a lynchpin of the Houston economy. Forbes.com discusses the impact of energy industry changes on the City of Houston...
March 10, 2009
"... The biggest problem facing Houston today revolves around the energy industry, which represents to this region of well over 5 million what finance does to New York. Already lower energy prices, along with the global slowdown, have taken a dent in job growth. Just last week, the Texas Workforce Commission reported a 0.7% employment increase for the area in 2008, compared with a robust 3.5% the year before.
Bill Gilmer, a verteran economist who covers energy for the Dallas branch of the Federal Reserve, reports that proposed new taxes and regulations plus falling prices have started to decimate the domestic oil and gas industry. Over the past year, he reports the number of rigs in operation across the country dropped from 2,000 to some 1,300.
"The impact of this on Houston's energy econmy, Gilmer suggests, will be servere, and it will drag the region and much of Texas down with it. 'We are talking about a Texas recession now without question,' he says. 'I lived throught the Jimmy Carter era before, and now it's deja vu.'
"Of course, some high-end jobs in energy will remain, particularly for those who work on massive new projects overseas, like in Saudi Arabia. Instead, the biggest hits will affect the production sector, which until recently was a prodigious creator of high-wage blue-collar jobs. Over the coming years, the production downturn could devastate places like western Texas, the Dakotas, Louisiana, California's Kern County and anywhere else that produces American crude and gas.
"Indeed, it may turn out to be one of the great ironies that the Obama adminstration, which campaigned earnestly against our 'dependence on foreign oil,' will in the end make us more so..."
By Joel Kotkin, Forbes.com
I certaiinly home that the robust Houston economy can survive these structural changes to the oil and gas industry. To read the full article, click here.