In Houston, oil workers may face the ax but employment still grows
Source: Reuters
Plunging energy prices robbed the Texas economy of an estimated 60,000 jobs last year, as oil and gas companies put the brakes on production and slashed investment, throwing engineers and geologists out of work.
But the forest of construction cranes sprouting around this petrochemical hub tell the flip side of the story, as some of the same forces that drove down those prices sparked tens of billions of dollars in investment in new processing plants to take advantage of cheap and plentiful supplies of oil and gas.
Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) are building mammoth chemical crackers to process polyethylene from natural gas, and logistics firms have created millions of new square feet of warehouse space as they plan to ship the output to the global plastics industry.
Rising chemicals output has contributed to record traffic at the Houston Port Authority, and officials say the trend is expected to continue. Throughout the Baytown area, which is on the outskirts of Houston, an estimated $8 billion worth of projects is expected to be finished this year and another $22 billion completed in 2017.
This has all propped up employment in Texas at an otherwise difficult time. The positive impact on the overall U.S. economy from the chemicals industry that this illustrates is also one of the reasons the U.S. should avoid a downturn despite troubles elsewhere in the world. That in turn should create the conditions for the Federal Reserve to raise interest rates again this year.
Read more: http://www.reuters.com/article/us-usa-fed-employment-insight-idUSKCN0WC0H9
Kip Humphrey
(4,753 posts)In Houston, housing prices are falling. In Texas, 2/3rds of unemployed folks do not collect unemployment due to the rules of engagement of employment here in Texas. Consequently, those unemployed persons do not appear in Texas unemployment numbers. The truth is, the oil business in Houston is in depression and it is not getting any better.
Sunlei
(22,651 posts)Time is now for the Federal Gov.(not state) to double the Ancient- cents a gallon Federal tax on gasoline & to stop any, Federal subsidies the 'welfare oil/gas industry' rakes in.
How about another EO, President Obama?
tsites
(36 posts)But it can be broken down into two very broad categories 1) extraction 2) refining. Extraction is the process of finding, drilling and transporting oil while refining is the process of turning the extracted oil into products. Domestic oil extraction boomed in recent years only when oil prices rose to the level that the very expensive processes involved with extracting the little remaining recoverable domestic oil could be done profitably. Fracking, deep water offshore drilling and the processing extracting usable material from tar sands and shale oil are all extremely difficult and wildly expensive and are only possible with very high oil prices. When oil prices fall, these ventures become unprofitable, but the refining side of the oil business booms. Low oil prices mean high profits for the refiners. Houston's oil economy is heavily into both. Because of consolidation through mergers, there are few large oil companies that don't profit regardless of oil prices so long as consumption remains high. The companies that hurt are the independent companies that are exclusively invested in one side of the oil economy or the other. These fluctuations in oil prices then allow the big oil companies to buy up the floundering independents when their side of the business is in dire straits. Houston used to have thousands of small and medium size companies supporting the energy industry, but today most are gone or exist in name only (now a subsidiary of a global firm). The price of a barrel of oil has little to do with whether the oil business is profitable. The only thing that can cause the oil business to be unprofitable is for access to oil to be limited or demand to go down. As long as our appetite for oil remains high and access to oil is unrestricted, oil companies will profit regardless of the price per barrel of oil.