The price for West Texas intermediate crude oil climbed steadily from about $48 per barrel in late September to $66 by late January. So far in February, we have seen WTI moderate to about $60 per barrel, still substantially above anything seen in 2016 and 2017. The increase in crude oil prices has spurred oil field activity in Texas leading to an uptick in production. The Texas drilling rig count climbed through mid-2017, reaching a plateau of about 450 active rigs through early 2018. The most recent weekly data shows an increase to 479 rigs for the week ending February 1. Even though legacy production declined noticeably through 2017, total oil and gas production in Texas is still ramping up. This shows the importance of new wells to overall production numbers. New well production is associated with a much bigger economic multiplier than production from existing wells, and thus is a key economic driver for the state. Another will be the Houston area’s recovery from Hurricane Harvey, which struck the Texas coast in late August, inundating Houston and nearby areas with record-breaking rainfall. The storm knocked Houston’s energy-recession recovery off-track, resulting in significant, but temporary, job losses last September. Job creation bounced back in October and November and was neutral in December. We expect the Houston area to show ongoing job growth and economic momentum though 2018. Both Dallas and Austin remain on the list for the proposed second headquarters for Amazon and both are favored to make the final four according to the Wall Street Journal (along with Nashville and Raleigh).
For a PDF version of this report click here: TX_Outlook_0218.
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