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The Texas economy struggled through 2015 after the price of crude oil and petroleum products plummet-ed.

August 2018 TX Economic Outlook

August 13, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Texas Is Back

    The Texas economy struggled through 2015 after the price of crude oil and petroleum products plummeted. Even after energy prices started to improve, the Houston area was dealt a severe blow by the unprecedented rainfall that came with Hurricane Harvey last year. Now the skies are clearing for Texas. Energy markets look firm, the Houston area is recovering from the flooding and the U.S. economy is doing well. With U.S. real GDP growth at a strong 4.1 percent annualized rate in the second quarter, we expect Texas to be considerably north of that number, near 6 percent or more when the data is released. Energy has returned as an accelerator for the Texas economy. West Texas is booming with the re-emergence of the Permian Basin as a global oil powerhouse. With the boom comes the risk of a bust. However, we expect that the very strong crude oil production coming out of West Texas will be sustained over decades, requiring significant and permanent economic investment. With a sustained industrial expansion in West Texas, the area’s non-energy economy will also grow. The severe climate and geographic isolation are limiting factors, but we expect to see a permanent expansion in West Texas metropolitan and micropolitan areas. In addition to the build up in oil drilling and production capacity, crude oil and petroleum product transportation projects are adding to Texas’ economic momentum. Pipeline expansion out of the Permian Basin is underway by several companies. Also, the Swiss commodity trading company Trafigura is planning to build the first deepwater oil export terminal in the U.S. near Corpus Christi.

For a PDF version of this article, please click here: August 2018 TX Economic Outlook

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