In Houston, oil workers may face ax but employment still grows
Plunging energy prices robbed the Texas economy of an estimated 60,000 jobs last year, as oil and gas companies put the brakes on production and slashed investment, throwing engineers and geologists out of work.
But the forest of construction cranes sprouting around this petrochemical hub tell the flip side of the story, as some of the same forces that drove down those prices sparked tens of billions of dollars in investment in new processing plants to take advantage of cheap and plentiful supplies of oil and gas.
Exxon Mobil Corp and Chevron Corp are building mammoth chemical crackers to process polyethylene from natural gas, and logistics firms have created millions of new square feet of warehouse space as they plan to ship the output to the global plastics industry.
Rising chemicals output has contributed to record traffic at the Houston Port Authority, and officials say the trend is expected to continue. Throughout the Baytown area, which is on the outskirts of Houston, an estimated $8 billion worth of projects is expected to be finished this year and another $22 billion completed in 2017.
This has all propped up employment in Texas at an otherwise difficult time. The positive impact on the overall U.S. economy from the chemicals industry that this illustrates is also one of the reasons the U.S. should avoid a downturn despite troubles elsewhere in the world. That in turn should create the conditions for the Federal Reserve to raise interest rates again this year. "They are shedding jobs upstream. That's the nature of the business," said B.J. Simon, associate executive director of the Baytown-West Chambers County Economic Development Foundation. But "the opportunity to build these crackers just could not be passed up...access to cheap feedstocks changed the whole equation downstream."
Construction workers have jobs, new schools are being built to handle a growing local population, a new Kroger Marketplace store is being completed, and a partially vacant shopping mall is being overhauled. The global economy may be sputtering, with weak demand one of the reasons that oil prices have cratered. But the U.S. keeps adding jobs, and at a rate consistent with the outlook from Fed policymakers who expect growing U.S. payrolls will mean enough domestic spending to keep the economy expanding overall.