Who is benefiting from the oil and gas boom? All Americans, but Texans even more than most. It’s a good time to be a Texan, as Forbes magazine noted in January. And there’s no end in sight for this boom — unless we sit by and let short-sighted policies and alarmism stifle it.
“An index that measures oil and gas activity in Texas has reached a record level, bolstered by rising production and wellhead prices, its creators announced this week,” reports the Houston Chronicle’s Fuel Fix blog. “The Texas Petro Index hit the record in February, buoyed by daily crude production levels that soared to the state’s highest level since 1980, said Karr Ingham, the economist who created the index. February crude production in Texas reached an estimated 77.2 million barrels — up 22.4 percent from the same time period in 2013.”
That’s right — Texas oil and gas activity is the highest since 1980.
It’s partially due to increased production.
“Ingham said higher wellhead prices caused an even more dramatic increase in the value of oil and gas produced in February, which rose by more than $2.85 billion from the previous year to $10.63 billion,” the blog added.
Writing in Forbes magazine, economist David Blackmon explained how this affects the overall economy.
“The reality for the United States is that the oil and natural gas industry has greatly enhanced the picture … in recent years, nowhere more than in my home state of Texas,” he wrote. “Where jobs are concerned, Texas has consistently outperformed the national economy in terms of job creation and rate of unemployment in every month since the advent of the Great Recession and the discovery of the Eagle Ford Shale play, both of which took place in October of 2008. Indeed, during the 24-month period from July 2009 through June of 2011, Texas created 49 percent of all new jobs created in the United States, and the vast majority of those jobs were either directly or indirectly the result of the state’s oil and natural gas boom.”
Their effect on other sectors of the economy can’t be overstated. For example the shipping industry is benefiting from two factors: more demand for shipping oil and gas (mostly liquefied natural gas), and cheaper fuel costs for shipping everything else.
But every boom can go bust.
That milestone reported by Fuel Fix — the most oil activity since 1980 — takes on a little more significance when we remember the oil bust that began in 1980.
Still, there’s cause for optimism.
The Texas economy is much more diverse now, which means a drop in oil prices won’t hammer the state like it did in 1981. And there’s little likelihood that demand will decrease significantly. Indeed, with Russia acting up in Eastern Europe, there are plenty of potential markets.
The real threat to the oil boom is in the White House, which is contemplating EPA rules that could strangle production.