The renaissance in the oil and gas industry in recent years has proved to be a real boon to the economies of a number of states, and perhaps no state more than Texas. Not only has the oil and gas industry provided a significant amount of money to Texas in the form of tax revenue, but it’s also been responsible – directly and indirectly – for a significant amount of growth in the state’s labor market. However, if Texas is to continue prospering from a thriving energy industry, its infrastructure must be improved and maintained, Mark Plummer, founder and chief executive officer for Chestnut Exploration & Production, told Rigzone.
Like much of the rest of the nation’s highway system, roads and bridges in Texas have largely been neglected for years, and are consequently in a state of decline, Plummer noted. And while traffic connected to the state’s exploration and production efforts has admittedly added to wear of local roads, the overall infrastructure has for many years been in need of repair and maintenance.
“The infrastructure issues are not critical yet, but they do need to be addressed now as we see signs of road deterioration,” he noted.
Because of the revenues the state received from the oil and gas industry – which provided $1.5 billion from natural gas production and nearly $3 billion from the oil industry, according to the Texas Comptroller’s office – the state should reinvest those funds in repairing roads and bridges, as well as utility systems.
“The oil and gas industry brings in jobs, capital and taxes, which improves the overall economic health of numerous locales. Oil companies pay local and county taxes, based on the value of their wells, just as residential real estate does. The companies then pay production taxes to the state government of top of those local taxes,” Plummer said. “The legislature needs to ensure than an appropriate amount of money is re-invested back into the community to keep the road and other infrastructure in good shape, as the industry’s trucks have to share roads with other businesses, farmers, ranchers and everyday citizens. Better roads are safer for us all.”
While Texas spending has waned, the deteriorating infrastructure is a problem all over the country, including the Bakken Shale play in North Dakota, and in resource plays in West Texas and South Texas, Plummer said. In real dollars, U.S. real government non-defense spending on structures began to decline sharply in 2009, and began plummeting in 2010, according to economists at BCA Research, an independent investment research firm. After reaching a level of $325 billion or more in the early 2000s, spending fell to about $300 to 310 billion until 2009. By 2013, U.S. infrastructure spending had fallen to $230 to 240 billion, nearly $100 billion less than it had peaked at earlier in the decade, BCA Research indicated.
Building America’s Future (BAF) and the National Association of Manufacturers (NAM) have also noted the deteriorating condition of the country’s infrastructure. A study of more than 400 manufacturers given by the two organizations indicates that a majority of Americans polled believe that America’s infrastructure “is in fair or poor shape,” and that roads are getting worse.
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