Even though oil is going through yet another bust, we often hear that Greater Houston is more diversified economically than before. So we’ll be OK, right?
We're not the monolithic oil and gas town we were in the 1980s, so we should be able to navigate the occasional oil busts we experience, including, of course, the current one…right?
Nope. At least according to Evan Mintz. The former Houston Chronicle editorial writer says in aTexas Monthly article Houston is not prepared for a prolonged industry bust.
"There's likely going to be a long structural decline of the oil and gas industry," Mintz told Houston Matters with Craig Cohen Wednesday. "It's going to go from boom to flat line. It's not going to disappear overnight, but something has to happen to a city when its main economic engine goes from growth to stagnancy."
Mintz points to Cleveland and other Rust Belt cities as cautionary tales of the dangers of becoming solely dependent on industry giants.
"Those places still exist and people still live there, but they know that their greatest days are behind them," Mintz said.
In October 2019, the CEO of Chevron, Michael Wirth, said fossil fuels will make up the majority of the energy mix for a long time to come, "but we also have to respond to these other pressures, and we operate at the invitation of the societies around the world, in the countries where we do business," he said.
But the fact that the industry is continually being rocked by falling prices begs a two-part question: When will the final nail be driven into the oil industry's coffin? And how can a city widowed of its overwhelmingly dominant industry survive its loss?
The Center for Houston’s Future is a think tank that has been tackling these questions for years.Peter Rodriguez, dean of Rice University's Jones Graduate School of Business, does not believe that Houston is facing the end of the oil economy. But he does agree that this latest bust is different from previous cycles.
"I think there is a period of structural decline ahead," Rodriguez said. "But I think the prognosis is we do need a new narrative for the future, and we've been saying that for a while. And this will accelerate it."
However, Rodriguez believes we are already more diversified than Mintz suggests, but diversification will not be the cure for an oil and gas industry fallout.
"Certainly we're more diversified than we were ‘83 though ‘86 and probably in the early 90s — and ever before," Rodriguez said. "But all cities are actually more diversified then they were then. We had a great period of globalization. Technology has integrated production processes around in the world. So — to an extent — yes more than in the past but diversified in some general claim that we have some backup industry that can now sweep in and fill the jobs that will be lost, certainly not."