Joe Raedle/Getty Images
Industryweek 8219 Oil Pipeline3

Oil Crash Dragging on Booming Texas Economy

Feb. 8, 2015
A 50% tumble in oil prices since June has prompted companies such as Royal Dutch Shell and Chevron to slash billions of dollars in worldwide investment. 

NEW YORK - As the saying goes, everything is bigger in Texas.

For the past five years, the economy of the Lone Star State has outperformed the rest of the United States.

But the collapse in oil prices has left Texas facing its toughest test since the financial crisis.

A 50% tumble in oil prices since June has prompted companies such as Royal Dutch Shell and Chevron to slash billions of dollars in worldwide investment. Oil services companies like Schlumberger and Halliburton have announced thousands of job cuts.

So far, only a handful of petroleum companies have filed layoff notices in Texas this year, and the Texas Workforce Commission actually reported an increase in mining jobs in December. 

Yet few doubt what lies ahead for the second-biggest U.S. state, by economic output and population, after California.

The Federal Reserve of Dallas also expects positive economic growth in 2015 in Texas.

"The bottom line is it's going to cause growth to slow, but job growth will remain positive," said Keith Phillips, a senior economist with the central bank division in San Antonio.

Ingham, the Amarillo economist, agreed that Texas will likely lodge some growth in 2015 statewide. 

But Ingham predicted about a 10% contraction in the Midland-Odessa oil region, where some 8,000 oil workers will lose jobs and all businesses are affected by the sector.

Ingham said oil companies will be cautious in the short run before hiring back staff, even if oil prices recover. That could result in departures from oil towns like Midland.

"You're looking at at least 18 months out into the future before things start to look a little bit better out there," Ingham said. "Who's in a position to ride that out in terms of not having a job and not having income?"

Copyright Agence France-Presse, 2015

Popular Sponsored Recommendations

Shifting Your Business from Products to Service-Based Business Models: Generating Predictable Revenues

Oct. 27, 2023
Executive summary on a recent IndustryWeek-hosted webinar sponsored by SAP

Gain a competitive edge with real-world lessons on private 5G networks

Nov. 16, 2023
The use of private networks in manufacturing applications is rapidly growing. In this paper, we present valuable insights and lessons learned from the field with the goal of enhancing...

Powering Up Productivity: The Transformative Power of AP Automation in Manufacturing

Oct. 25, 2023
Discover how AP Automation is revolutionizing the manufacturing industry, driving efficiency, cost savings, and security. In today's world, automation is the key to staying competitive...

Decarbonization Navigator: A Toolkit for Organizations

Sept. 28, 2023
The increasing urgency of addressing climate change along with stakeholder pressures are driving the need for organizations to prioritize decarbonization. Discover how to start...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!