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Old 01-15-2015, 08:45 AM
 
Location: Frisco, Tx
419 posts, read 1,346,788 times
Reputation: 232

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Quote:
Originally Posted by EDS_ View Post
The world economy would die within a week if oil went to $2.00bbl (no country can extract at that price). Did you mean gas at $2.00 per gallon?
I think it's safe to say that's what he meant EDS as I'm sure you know. Dallas shouldn't be affected that much by oil much more than any other city. Houston on the other hand, certainly Midland, huge affect on those cities.

That being said, oil keeps tanking it's bad for everybody unfortunately. We(the usa, world for that matter) should have diversified our energy resources years ago, but money talks and oil is good for business until it's not.
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Old 01-15-2015, 07:15 PM
 
382 posts, read 459,726 times
Reputation: 227
Quote:
Originally Posted by sericrafter View Post
Dallas is not as dependent on oil and gas as Houston or some other parts of Texas. OPs concern seems to be mainly with Dallas (DFW) economy. There might be some slowing down effects overall on Texas, even less so over DFW.. well put in the below article -just a 'tap on breaks'.

Fed economist: Low oil prices will slow state
Thanks for the link....Dallas Fed is predicting a mild slowdown (slower growth) in 2nd quarter for Dallas (vs now for Houston).

Quote:
Originally Posted by Taynxtlvl View Post
I think Dallas Today (2015) is a lot more diverse than the Dallas of yesterday (1980's) And as diverse as any major city in the US. I think its okay for the time being.
Quote:
Originally Posted by EDS_ View Post
O&G makes up 3.1% of Texas employment and roughly half that percentage in Dallas. Low oil prices will definitely slow the economy a bit over time. However, I'd argue that so long as the slow down is not too quick or too deep it's like a good thing for many.

It'll be interesting to see what OPEC (the Saudis and UAE in particular) do vis a vis prices over the longer term, say 18mos-2yrs. The Saudis Ghawar field in particular is like an underground lake of oil their extraction costs are really low coupled with the fact that they have large cash reserves can sit on cheap oil for many years. Other OPEC members do not have those luxuries.
As you guys say, if the price remains low or lower through to 2017, it might have a greater impact.

I also hear that interest rates may increase over that time, which will also hit the O&G sector which financed much of the expansion on credit.

Growth from other sectors may not be put off on oil alone as the factors that made Texas attractive for business relocations are not going to change. But if employment picks up elsewhere in the country aided by sustained lower oil prices, maybe migration into Texas from other parts will taper (as Philip mentions).

Interesting point someone had that a stock market plunge may have greater impact. I agree and it is probably a serious risk at this point.
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Old 01-15-2015, 08:32 PM
 
Location: Wylie, Texas
1,577 posts, read 2,306,266 times
Reputation: 2410
OK I have to ask because I've seen this said a lot; but why exactly are low oil prices bad for DFW? I get why it's bad for Houston/North Dakota and other cities with a heavy reliance on oil, but that has never been a major part of the DFW economy to that extent. I would think that the low oil prices would be awesome for boosting spending as more consumers have extra cash to spend. I still remember when oil was over $4 a gallon. THAT was a major negative deal for the economy.

On a side note, for years I'd heard about how Houston had learnt its lessons from the oil bust of the 80s and diversified away from oil. A glance through some of the threads in that forum screeching about the low oil prices would suggest that oil is still number one with a bullet in that city. I guess you are what you are sometimes.
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Old 01-15-2015, 08:48 PM
 
7,324 posts, read 8,162,905 times
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Quote:
Originally Posted by biafra4life View Post
OK I have to ask because I've seen this said a lot; but why exactly are low oil prices bad for DFW? I get why it's bad for Houston/North Dakota and other cities with a heavy reliance on oil, but that has never been a major part of the DFW economy to that extent. I would think that the low oil prices would be awesome for boosting spending as more consumers have extra cash to spend. I still remember when oil was over $4 a gallon. THAT was a major negative deal for the economy.

On a side note, for years I'd heard about how Houston had learnt its lessons from the oil bust of the 80s and diversified away from oil. A glance through some of the threads in that forum screeching about the low oil prices would suggest that oil is still number one with a bullet in that city. I guess you are what you are sometimes.
Low oil and gas extraction/prices hurt Texas in several ways.

1. The state relies on O&G derived revenues significantly for general fund revenues.
2. Many of the state's richest people are rich because of O&G and so on down the line.
3. O&G benefits Texas colleges especially A&M and UT even more so - it's why UT has the 3rd largest endowment in the world ($20.5 billion) and TAMU is 7th ($8.7 billion).

22 Richest Schools In America - Forbes

4. Even though O&G employment is ~3.1% of total TX employment the O&G sector pays exceptionally well and O&G companies spend massively.
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Old 01-15-2015, 09:03 PM
 
Location: Southlake. Don't judge me.
2,812 posts, read 3,576,995 times
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Quote:
Originally Posted by EDS_ View Post
The world economy would die within a week if oil went to $2.00bbl (no country can extract at that price).
Which means that the price can never get that low, because supply would drop dramatically. I know you know that, but just saying.

In general low oil prices are good for the economy, as it impacts energy and transport costs. Obviously it's bad for the O&G part of the world economy (and other sectors which one way or another profit off of O&G) but good for most of the rest of the economy (to whom O&G represent costs). In general, countries whose economies are driven a lot by O&G would be hurt. I don't know offhand how much of Canada's economy is based on O&G (I know in some parts of that country quite a bit), and since they are our biggest trading partner anything which hurts them hurts us to some extent.

DFW certainly appears to have diversified its economy quite a bit (Houston, as noted, not as much), so I'd guess it won't have a huge impact.

As an aside, one of my throwaway pithy lines is "natural resource extraction economies suck". That's an overly harsh overgeneralization, but overall I'm not a huge fan of any economy that relies tremendously on natural resource extraction, for a number of reasons.
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Old 01-16-2015, 12:02 AM
Status: "A trickle can become a flood" (set 12 hours ago)
 
Location: Dallas, TX
3,013 posts, read 1,765,661 times
Reputation: 2935
Agreed about the economic diversity. In fact, I barely think of oil at all when I think of Dallas, even before I moved here in 2002. It now gets its image more from IT (I've met SO many people in that industry over here), Texas Instruments, EDS, etc. During the 90s dot-com boom, Richardson (suburb) was known for its Telecom Corridor. American and Southwest Airlines also employees a lot of people here. Insurance, banking, and finance are big here too. No doubt there's a few other industries I'm forgetting about as well.

In short, Dallas is not even close to being just about oil.
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Old 01-16-2015, 01:19 AM
 
988 posts, read 1,898,281 times
Reputation: 1083
For Dallas, specifically:

Dallas-Fort Worth office building market hopes for more boom times in 2015 | Dallas Morning News

incredible numbers vs Houston. Undoubtedly there will be some residual effects. Less flights to and from Houston and Midland(ouchie for the HSR). Less investment from the few big real estate players, thought they may be encouraged by the diversity of the DFW market.

DFW has become a huge player in logistics though with its central location. DFW is building the vast majority of this type of space and many companies have moved huge operations here. Especially in southern Dallas County and near Alliance and DFW airports. Lower oil prices benefit this industry as well as the airline industry big time. There will be some lag, but looking at those office numbers, DFW has greatly diversified its economy.
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Old 01-16-2015, 08:09 AM
 
Location: ITL (Houston)
9,223 posts, read 13,471,631 times
Reputation: 3545
Quote:
Originally Posted by rantanamo View Post
For Dallas, specifically:

Dallas-Fort Worth office building market hopes for more boom times in 2015 | Dallas Morning News

incredible numbers vs Houston. Undoubtedly there will be some residual effects. Less flights to and from Houston and Midland(ouchie for the HSR). Less investment from the few big real estate players, thought they may be encouraged by the diversity of the DFW market.

DFW has become a huge player in logistics though with its central location. DFW is building the vast majority of this type of space and many companies have moved huge operations here. Especially in southern Dallas County and near Alliance and DFW airports. Lower oil prices benefit this industry as well as the airline industry big time. There will be some lag, but looking at those office numbers, DFW has greatly diversified its economy.
The Panama Canal expansion/Port of Houston growth from that expansion is fueling a lot of that logistics growth in DFW. The Houston office market growth was so ahead of anywhere else in the states for years, it was bound to slowdown.

Quote:
Originally Posted by biafra4life View Post
On a side note, for years I'd heard about how Houston had learnt its lessons from the oil bust of the 80s and diversified away from oil. A glance through some of the threads in that forum screeching about the low oil prices would suggest that oil is still number one with a bullet in that city. I guess you are what you are sometimes.
The energy industry will always be number one for the Houston economy. Energy is one of those essential world industries (like NYC with Finance, SF with Tech). The difference between now and the 80s was that back then, energy was over 80% of Houston's economy. Today, it is down to 60%, which is still a lot, but much better. Houston will be fine as long as the overall US economy is fine. There will be a dip this quarter for Houston, but it will be fine.
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Old 01-16-2015, 08:13 AM
 
Location: Wonderland
41,186 posts, read 32,863,519 times
Reputation: 57428
I will be shocked - SHOCKED I TELL YOU - if gas prices remain low past about April. Have any of us ever experienced a summer when gas prices didn't go up?
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Old 01-16-2015, 08:34 AM
 
Location: Shavano Park, TX
155 posts, read 162,439 times
Reputation: 264
Quote:
Originally Posted by EDS_ View Post
4. Even though O&G employment is ~3.1% of total TX employment the O&G sector pays exceptionally well and O&G companies spend massively.
Very important point here.

Oil and Gas jobs in Texas might only represent 3% employment, but the amount of money in the sector that trickles down to other sectors is enormous. Think commercial real estate, transportation, residential real estate, support, administration, etc -- all have benefited heavily from recent oil exploration in Texas.

JP Morgan Chase predicts Texas is in for a recession for 2015

JPMorgan to Texas: Brace for a recession - Dec. 18, 2014

Here in San Antonio, I've seen first hand how the past 5 years of Eagle Ford Shale exploration has resulted in a huge influx of wealth into the city. All those folks with ranches in South Texas "were" receiving huge dividend checks... but that is quickly dropping.

I live in a neighborhood where the lowest priced home is 1.3m - and the residents here are 40% oil, 40% doctors, and 20% retired.

If you want to really chart how oil prices will affect DFW - keep a close eye on Park Cities Real Estate. It was out of control in 2013/2014. Let's see how things shape up for 2015/2016. Should be an eye opener.
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