Plunging Oil Prices Test Texas’ Economic Boom

Downturn Has Many Wondering How Lone Star State Will Weather a Bust

By Jon Hilsenrath, Ana Campoy and Ben Leubsdorf
Jan. 4, 2015 10:33 p.m. ET

Retired Southwest Airlines co-founder Herb Kelleher remembers a Texas bumper sticker from the late 1980s, when falling energy prices triggered an ugly regional downturn: “Dear Lord, give me another boom and I promise I won’t screw it up.” ... Texas got its wish with another energy-driven boom, and now plunging oil prices are testing whether the state has held up its end of the bargain.

The Lone Star State’s economy has been a national growth engine since the recession ended, expanding at a rate of 4.4% annually between 2009 and 2013, twice the pace of the U.S. as a whole.

The downturn in energy prices now has triggered a debate over whether Texas simply got lucky in recent years, thanks to a hydraulic-fracturing oil-and-gas boom, or whether it hit on an economic playbook that other states, and the country as a whole, could emulate.
....

Now that oil prices have plunged nearly 51% from their June peak to $52.69 a barrel, some Texans sobered by memories of past energy busts are bracing for a fall. The argument among economists and business leaders isn’t whether the state will be hurt, but how badly.



Corrections & Amplifications

Firefly Space Systems expanded to the Austin area last year. An earlier version of this article incorrectly said it was earlier this year. (Jan. 5, 2015)

Write to Jon Hilsenrath at jon.hilsenrath@wsj.com, Ana Campoy at ana.campoy@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com

By Reuters Media on Dec 6, 2014 at 1:12 a.m.

WILLISTON -- U.S. energy firms are swiftly shifting drilling rigs away from less productive areas and hunkering down in sweet spots of North Dakota and Texas shale oil fields as they try to lift output and cut costs in response to the toughest crude market in years.

Rig deployments or applications for new well permits fell by half in recent months in parts of North Dakota's Bakken formation and the Eagle Ford and Permian Basin in Texas, but the most prolific areas are holding up, according to officials and data from the two top crude-producing states.
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Sweet spots

North Dakota regulators say prices would have to slide to $40 per barrel before most producers started losing money there.

Consultants at Woods Mackenzie say the breakeven level for Eagle Ford in Texas could be as low as $50 per barrel.