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Texas oil and natural gas industry employment fell 19.4% last year amid a nearly 66% decline in the price of oil and a 75% reduction in the number of active drilling rigs, according to economists at the Federal Reserve Bank of Dallas. Within the state, though, regions vary in their economic performance.
"Job growth was weak in metropolitan areas such as Midland, Odessa, Longview, Corpus Christi and Houston that have a larger share of jobs in mining [which includes oil and natural gas extraction]," the Dallas Fed said in a note published last week. "Conversely, regions more closely linked to the U.S. economy, such as Dallas, or to sectors benefiting from low energy prices, such as leisure and hospitality in San Antonio, continued growing robustly."
What low prices of oil and natural gas take away in one area, they can give back elsewhere, the Fed economists said. A "flurry" of petrochemical projects along the Gulf Coast will take advantage of low-cost energy and feedstock.
"In the Houston area alone, $50 billion in planned petrochemical plants will bolster construction jobs through 2017, when most of these projects are slated for completion," the Fed said. "Other multi-billion-dollar projects along the coast, including several large liquefied natural gas export terminals, will continue supporting construction jobs. The expansion of these downstream industries allowed the larger metropolitan areas along the Texas Coastal Bend to avoid job losses in 2015."
Meanwhile, the downturn continues in the oil and gas patch. Texas Comptroller Glenn Hegar said Monday that March oil and natural gas production taxes totaled $107.2 million, which is down 55% from March 2015. However, state sales tax revenue was up modestly, charting a 2.1% increase from a year ago to hit $2.17 billion in March.
"The modest growth in sales tax collections for March was in line with expectations and comes after five consecutive months of declining sales tax revenues," Hegar said. "Stronger growth in receipts from the retail trade, restaurant and construction sectors was offset by continued weakness in net collections from oil and gas-related sectors."
Texas produces more than one-third of the nation's oil output, and a price collapse like the one taking place now "is a body blow," the Austin-based Texas Taxpayers and Research Association said last week. "Oil and gas are five times more important to the Texas economy than they are to the nation as a whole" (see Shale Daily, March 30).