Energy & Environment

Why A 1980s-Style Bust Is Not Happening For Texas As Oil Prices Drop

JP Morgan this week predicted that the big drop in oil prices could send the Texas economy into a recession next year. Should Texans panic?

 

gas prices
To sum it up, the three reasons Texans should be calm: revenue, employment, and output.  Image credit: free images

Three decades ago, a similar plunge forced the industry to lay off thousands of workers, banks failed, housing prices plummeted. But Erica Grieder, a San Antonio native who’s now senior editor at Texas Monthly, offers some reasons why this time could be different in an article titled “Three Reasons Not to Panic About Oil Prices.”

“A lot of how we’re discussing the current drop in oil prices is colored by the memories we have of the previous big oil bust in the 80s which was of course devastating and horrible,” Grieder told News 88.7. “Compared to the 80s though we’re just a lot much less vulnerable to a drop in oil prices.”

Grieder used research from the Federal Bank of Dallas. Back in the 1980s, oil & gas extraction accounted for 20 percent of the state’s total economic output. Now, it about half that, 11 percent.

The industry used to account for 5 percent of all jobs. Now, just 2 percent.

“So although a disaster in the oil industry wouldn’t be good for Texas, it will be much less difficult to deal with than it was in the 80s,” said Grieder. She says cheap oil may hit hardest in smaller boomtowns like in South Texas where drilling has surged but less so in Houston where the economy is far more diverse.

 

Subscribe to Today in Houston

Fill out the form below to subscribe our new daily editorial newsletter from the HPM Newsroom.

* required

Share

Dave Fehling

Dave Fehling

Director of News and Public Affairs

As Director of News and Public Affairs, Dave Fehling manages the radio news operation at Houston's NPR station. Previously, he was a reporter at the station, covering the oil & gas industry and its impact on the environment. He won top state honors for in-depth and investigative reporting as well...

More Information