Texas growing faster than rest of US

Fuel Fix:

The flourishing energy sector along with across-the-board private sector hiring will keep Texas’ economic growth moving faster than the nation’s, an economist with the Federal Reserve Bank of Dallas predicted Wednesday.

“We’ve gone from recovery to expansion,” senior economic policy adviser Keith Phillips told those attending the San Antonio Area Foundation’s annual meeting and investment luncheon. “The United States is at least a couple of years away from regaining jobs, where in Texas almost all of the large (urban) areas regained all the jobs lost and are now adding to that.”

Petroleum jobs helped put Texas at No. 3 in terms of job growth. Like Texas, No. 1 North Dakota and No. 2 Utah are experiencing shale booms.

Texas took a hit when energy prices collapsed in 2009, but now is benefiting from both the bounce back in oil prices and the use of hydraulic fracturing.

“They say there’s hundreds of new millionaires created every month in the Eagle Ford, and I don’t doubt that,” he said.

The bad news is that the labor-intensive jobs needed to get the wells started may have begun to drop off as wells shift into production.

“I don’t think we’re going to see any declines this year in mining (jobs), but we’re not likely to see the big gains that we saw early last year and in 2011,” he said. “Pumping oil doesn’t take much labor. It’s the drilling and setting up these wells that take up a lot of the labor.”

The number of jobs peaked nationally and in Texas in 2008 before declining as the Great Recession set in.

The state’s turnaround has been steady. Texas surpassed its August 2008 jobs peak in November of 2011 and has recorded job growth of 3.1 percent as it heads into 2013.

The nation as a whole is still 2.3 percent below its peak, reached in January 2008.

Beyond oil and gas jobs, the state has a strong technology sector and has remained a top exporter, Phillips said. In addition, the housing market never sagged to the extent it did in other states, and household finances are relatively stable. About 8.8 percent of Texas mortgage holders remain “underwater,” compared with 57 percent of those in Nevada and 22 percent of mortgage holders nationwide. These factors have led to job growth in sectors beyond oil and gas.

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Texas economy remains diverse despite the surge in oil and gas production.  I think many of the drilling jobs will switch to the Cline formation in West Texas which is actually much larger than the Eagle Ford.  There should also be jobs in infrastructure expansion as pipelines are added to supplement the currently available ones that are at or near capacity already.  If there are not enough pipelines then rail will have to take up the excess oil.  As noted below, a free trade agreement with Europe will also add to Texas economic growth.