A volatile market
Houston economy expert Bill Gilmer explained several uctuations in the region’s oil and gas industry since its most recent peak in 2014. SOURCES: BILL GILMER, UNIVERSITY OF HOUSTON’S BAUER INSTITUTE FOR REGIONAL FORECASTING, U.S. ENERGY INFORMATION ADMINISTRATION, FEDERAL RESERVE BANK OF ST. LOUIS, U.S. BUREAU OF LABOR COMMUNITY IMPACT NEWSPAPER
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2 0 1 4 Crude oil exceeds $100 per barrel, and Houston has about 240,000 energy employees including oil producers and related services.
2 0 1 5 1 6 The drilling market collapses; oil prices drop; Houston loses about 77,000 energy jobs due to speculative excesses.
2 0 1 8 Oil producers begin ling bankruptcies, and lending activity declines, leading to a loss of about 9,000 jobs.
2 0 2 0 The pandemic shuts down the economy; oil prices drop due to international con ict; Houston loses 31,000 energy jobs.
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really messed with the market,” Bell said. “I think the goal is to get com- fortable with the cyclical side of the market … and that’s just kind of a roll- er-coaster ride.” Gilmer said the industry peaked in 2014 with about 240,000 Houstonians employed in energy—including oil pro- ducers, oil eld services, machinery and fabricated metals sectors—about the same size of Houston’s energy workforce in the early 1980s. But this was “a bubble just waiting to burst,” and over the course of 2015- 16, the region lost about 77,000 energy jobs, he said. He said this helped right- size the industry, with about 50,000 of those jobs never being recovered. Until around 2018, Gilmer said oil and gas executives had a growth stock mentality, meaning they would invest money from stock sales back into the company with no intention of o ering dividends. Now, the industry is seen more as a value stock—a slow-growing company that must o er signi cant dividends to attract investors. State Rep. Mike Scho eld, R Katy, whose district starts just west of the
Local professionals expressed concerns about poten- tial government regulations holding the industry back or forcing change too quickly as President Joe Biden’s administration sets sights on clean- er-energy initiatives. energy “I think it’s always smart for us to prepare for … more restrictions in drilling and more laws coming down that could make it a little tougher,” Bell said. Industry snapshot Around the same time demand for oil began to drop when the pandemic hit Houston, Saudi Arabia initiated an oil price war with Russia after Russian o cials refused to reduce oil produc- tion to maintain reasonable prices. Oil hit a historic low of -$37.63 per barrel April 20, according to the Nasdaq stock exchange—a result of the expiration of oil futures contracts, Community Impact Newspaper reported. “Sure, the pandemic had a lot of negative e ects to [the industry], but not as much as Russia and Saudi Ara- bia playing with oil prices. That’s what
Energy Corridor in Katy and covers parts of Cypress, said while oil and gas may not be as dominant locally as it once was, uctuations in the industry have a domino e ect on other sectors of the economy because it still sup- plies so many local jobs. “You cannot damage the oil and gas industry without severely damaging the families that live here,” Scho eld said. “In my district anyway, when I knocked on doors, it was a biparti- san concern. … Everybody either was a ected by it personally or their family was or their neighbors were.” Major oil and gas companies based in the region laid o thousands of employees throughout 2020, includ- ing Chevron, which acquired north- west Houston-based Noble Energy in October and announced plans to lay o 25% of the sta . ExxonMo- bil also announced sta reduction plans last fall that would a ect 1,900 employees—most of which were in Houston-based management o ces, o cials said in a statement. Patrick Jankowski, senior vice president of research at the Greater
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prices had not yet reached prepan- demic levels, according to the U.S. Energy Information Administration. Houston is down 31,000 energy jobs since the second quarter of 2019, said Bill Gilmer, the director of the University of Houston’s Bauer Insti- tute for Regional Forecasting. “We’re going to see the economy begin to recover and things begin to go back to some semblance of normal- ity,” Gilmer said. “But the oil piece of this continues on for a while because it’s tied to the global economy.” While the industry has been hit hard in the last year, Gilmer said it has been “six years of bad news” when it comes to the volatility of the upstream oil sector. Advances in technology during that time have led to more e cient ways to extract, sell and store oil, said Dustin Bell, the head of mineral acquisitions and business develop- ment at an energy investment com- pany that launched in Cypress last February called Allegiance Oil & Gas.
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