With the oil bust in Houston, are we going to see a surge of Houstonites trying to get jobs here? (San Antonio: appointed, layoffs)

[Austin97]

Originally Posted by madrone2k

Could be. One argument goes like this: we're in a situation in which oil supply has temporarily exceeded demand by a lot. The key question is "how long does temporary last?".

Demand is less than expected because of a slower-than-expected economic recovery in Europe and slower-than-expected growth in China, et al. At the same time, supply is up in large part from increased onshore US production (fracking+horizontal drilling in shale plays).

However, those shale wells play out faster (e.g., 60-70% in the 1st year). Therefore, it is argued, if the price drop makes it uneconomic to drill new shale wells, we'll stop doing so and the oversupply will be over within a couple of years and oil prices will rebound to comfortable levels.

Its actually the saudis. They are trying to kill our nascent oil renaissance.

In September, despite a global oil glut developing largely because of China’s slowdown and the rapid increase in U.S. production, the Saudis boosted production half a percent, to 9.6 million barrels a day, lifting OPEC’s combined production to an 11-month high of almost 31 million barrels a day. Then, on Oct. 1, Saudi Arabia lowered prices by increasing the discount it offered its major Asian customers. The kingdom might just as easily have cut production to defend higher prices. Instead, the Saudis sent a strong signal that they were determined to protect their market share, especially in India and China, against Russian, Latin American, and African rivals. Iraq and Iran followed Saudi Arabia’s example.

[madrone2k]

For prices to go back up, supply has to fall relative to demand. A fall in supply could come from many places: the US, Saudi Arabia, or many other places. The Saudis have their own reasons not to cut their production. I can't read their minds, but my guess is that they expect high-cost producers in the US to fold first ... but I can't rule out the possibility that they would be OK with cuts to come from other sources. Either way, they would maintain a higher market share.

You might be right, maybe "they are just out to get us". Other speculation I've heard is that they are trying to hurt Iran or Russia or ISIS. Or ... perhaps all of the above.

[Novacek]

Originally Posted by madrone2k

For prices to go back up, supply has to fall relative to demand. A fall in supply could come from many places: the US, Saudi Arabia, or many other places. The Saudis have their own reasons not to cut their production. I can't read their minds, but my guess is that they expect high-cost producers in the US to fold first ... but I can't rule out the possibility that they would be OK with cuts to come from other sources. Either way, they would maintain a higher market share.

Personally I think the Saudis have miscalculated. Apparently the shale wells have a higher cost per barrel (why new ones might stop when the price drops) but a relatively low cost for a new well (on the order of millions). So US production slows, prices rise, then US production starts right back up again.

[hoffdano]

If the people looking for work are O&G people - Austin is not likely to have many choices for them.

A longer term slowdown in energy will spill into the entire state. I'm sure some state economists are already looking into it. The legislature is in session and it will be very important for them to not over budget for the next two years.

[oldtoiletsmkgdflrpots]

And, of course this has nothing to do with the Keystone Pipeline and how we "need" it.

[tom331]

The US government should encourage US oil companies to import oil from other countries and save the oil under
our ground when the oil price is below our cost of pumping our own oil. When there is war or emergency, we would have enough oil lasting for a long time.

[Jack Lance]

Brookings analyzed the world’s 300 largest metros based on annual growth rates for per capita economic output and employment from 2013 to 2014, combining them into an index. Here are some details of the top Texas metros:

Austin ranked No. 38 based on its 1.9 percent growth in economic output and its 3.6 percent job growth in 2014.

Houston was No. 39 for its 1.6 percent annual economic growth and 3.7 percent annual job growth.

Dallas ranked No. 63, with 0.8 percent annual economic growth and 3.4 percent annual job growth.

San Antonio ranked No. 131 and El Paso was No. 175.

Study puts Dallas in top tier of world's fastest-growing economies | Dallas Morning News

Hate to bust your bubble but there isn't an economic bust in Houston yet. ...

[Trainwreck20]

Yeah, Houston is a lot more than oil these days. If there is a big bust, the real pain will be in the fields, not in Houston.

[hoffdano]

The full effect of a downturn in O&G will take many months to see. If 20,000 people lose their jobs there will be no immediate observable impact. But six months later, when they aren't working, can't make house payments, and the layoffs continue we will see it.

[Jack Lance]

Originally Posted by hoffdano

The full effect of a downturn in O&G will take many months to see. If 20,000 people lose their jobs there will be no immediate observable impact. But six months later, when they aren't working, can't make house payments, and the layoffs continue we will see it.

"If" is a big word. Remember even in the 80's bust Houston's overall economy still expanded from 1980 to 1990 and Houston's population still increased during that same time frame.

Circumstances now are different however. The 80's glut was contrived by the Reagan administration specifically to stifle the Soviet economy. This price plunge was much more foreseeable and most of the larger outfits are hedged to offset much of the ill effects. Also in the 80's you didn't have the Chinese and Indian economies competing for a huge share of the worlds energy resources. This glut could backfire and bring China and Russia closer together. Things never work out exactly the same way twice.