The health of the crude oil and natural gas industry seems to be under-appreciated, economist Karr Ingham told a roomful of Texas producers and energy industry journalists in a July 29 presentation given by the Texas Alliance of Energy Producers.
The energy industry in Texas is growing at a modest but stable pace, and more people than ever before are employed in the state’s energy industry, Ingham, the creator of the Texas Petro Index (TPI), said at the Houston Petroleum Club presentation.
According to TPI statistics, the number of Texans who are employed by oil and gas companies is nearly 275,000, and the figure doesn’t include many of the people who work for themselves within the industry.
While only a fraction of new jobs in Texas are directly related to the energy industry, there is a multiplier effect that is likely producing four jobs in other industries for every new job generated in the energy industry, Ingham said.
“And that multiplier of five is conservative,” Ingham added.
As a result, Texas was about the last state to go into a recession, and the first state to come out of the recession, “And that’s what you want,” Ingham said.
In one category, however, Texas has lost its first-place ranking. North Dakota has the highest annual growth rate of any state, relegating Texas to second-place status in 2012.
“That is like comparing a developed economy to an undeveloped economy, since the Texas economy is about 30 times the size of North Dakota’s economy,” Ingham explained.
While natural gas production is currently running at levels that reflect a year-on-year decline of 6.8 percent, the value of natural gas produced in Texas has increased more than 40 percent to more than $13.5 billion, the TPI shows.
The decline in natural gas output was limited by the “casinghead gas,” which is gas that is unexpectedly found while drilling for oil, Ingham said. Because of the amount of crude oil drilling underway, casinghead gas increased by 20 percent through the first half of 2013.
The crude oil sector is currently the real star in the industry. Wellhead prices in June 2013 were 16.4 percent higher than they were in June, 2012, while Texas crude oil production in June was up by about 16 percent over the year-ago figure, according to the TPI.
The combination of the climb in crude oil production and higher prices has boosted the value of Texas’ crude oil market to nearly $6 million, up more than 35 percent, the TPI indicated.
And no matter how it is spelled, the game-changer for petroleum can be summed up in one word, Ingham said.
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