'Diversification' a Boon Amid West Texas Oil Boom

'Diversification' a Boon Amid West Texas Oil Boom

As many states around the U.S. maintain sluggish economies and elevated unemployment rates, Texas is booming. Jobs in the state are bountiful and the oil and gas industry continues to hum. Unlike the oil boom and bust pattern of the 1970s, “diversification” may keep economic indicators positive regardless of oil markets according to Karr Ingham, a Texas-based gas and oil economist. 

“The Texas economy in the 1970’s and 1980’s was troublesome,” Ingham told Breitbart Texas. “We went through years of economic hardship and a lot of it had to do with oil and gas, which was a much larger share of the Texas economy than it is now. Even though the oil industry and gas has been thriving in recent years, the Texas economy is no longer dependent on it for ups and downs.”

Indeed, Texas was so energy-centered in the 1970’s that when the oil industry crashed, it literally had a domino effect on the state’s entire economy, according to Ingham.

“The oil and gas industry has not gotten smaller–rather, the overall Texas economy has gotten bigger,” Ingham added. “The state economy is now a powerhouse. It is more than just an oil and gas economy; it is an industrial economy, a tech economy, a business economy, a manufacturing economy… Texas has a lot going for it. We are much better positioned in terms of experiencing a long period of economic difficulty than we were in the ’70’s.” 

John Osborne, CEO of the Lubbock Economic Development Alliance, also told Breitbart Texas that diversification has made the Texas economy stronger and more stable than ever before. He mentioned that the aerospace, tech, and tourism industries have all grown significantly during the last 30 years.

While the push to diversify continues, local officials around the state are consciously trying to attract industries to Texas.

Communities may be selective about which businesses they aim to welcome–those that would drain the state’s natural resources like water are not as highly sought-after.

“We want industries that are not going to have a drastic negative impact on the state’s limited resources,” Osborne said. “Any industry that involves intellect or high tech will be a great fit for Texas, but the state will not actively pursue other industries that require high uses of water.”

John Dugan, Vice President of Marketing and Recruitment at the San Angelo Chamber of Commerce, told Breitbart Texas, “We don’t try to recruit water-intense users. If you have a manufacturing process that includes lots of water, you’re not going to want to come to west Texas.”

Regardless of recruitment, businesses of all types continue to flock to Texas, according to local economic development officials. Dugan said his area is attempting to absorb the population surge by creating a strong infrastructure.

“In order to maintain the economy with the increasing population, we’re going to have to grow and recruit people to our area,” Dugan added. “We are on our 45th consecutive month where sales tax [receipts have] increased. We’re just beginning to see the effects of a growing population.”

Energy economist Ingham fears that the population and jobs growth will come to a sudden halt if Democrats are successful in “turning Texas blue.” Without the state’s business-friendly laws, diverse industries would have little incentive to pack up and move to the Lone Star State.

“Where we are, who we are, and the size of the state means we pack a punch. But you kill that when you overtax and over regulate,” Ingham said. 

The 2014 gubernatorial contest does inject a sense of uncertainty according to some economic development leaders, however.

“Governor Rick Perry was in office for so long and there’s some comfort knowing who is in office,” Lubbock-based John Osborne said. “What will the new governor’s priorities be and how will he or she lead differently than Perry?”  

Karr Ingham draws a clear line on which political party he believes has the pro-business track record.

“Democrat policies tend to not favor strong, long-term economic growth,” Ingham added. “Texas policy makers have maintained the view that the government shouldn’t take steps that directly create jobs. Instead, what the state needs to continue to do is maintain a pro-growth, business friendly, low tax environment where the words ‘state income tax’ are almost never uttered. If Texas continues to do this, business owners will keep doing what they do best, which is run their businesses and hire lots of people in the process.”

Follow Kristin Tate on Twitter @KristinBTate


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