Coming off a year of higher prices and record production, the oil and gas industry now faces a period of contraction.Î¾ Economist Karr Ingham with the Texas Alliance of Energy Producers says that will affect jobs.
"We finished the year with higher employment than we had in 2007 by quite a lot.Î¾ However, interestingly enough and a little bit disturbingly, we'ev now seen a peak in industry employment, as well in the latter part of 2008.Î¾ So that really leaves no E&P indicator in Texas untouched at this point."
Ingham says reduced production capacity is on a collision course with rising demand.
"That may well set the stage for a very dramatic price recovery, which of course would be a troubling set of price increases on the consumer side."
Typically the price of gasoline rises and falls in tandem with the rise and fall of crude oil prices, but Ingham says there's a disconnect because of reduced refining capacity.
"The crude oil price portion of a gallon of gasoline is in the, oh, probably 45 per cent range.Î¾ We're just having some diminished refining capacity squeezing supply a little bit, and hence, this little bit of a disconne t between crude oil and gasoline prices."
Ingham says he's optimistic about economic recovery.
"Even though it's certainly all bad economic news all the time, I'm not expecting any Great Depression or any such thing.Î¾ And again, when we have a newly-growing economy, we will, I'm virtually certain, see renewed demand for energy products."
Ed Mayberry, KUHF Houston Public Radio News.