Texas leads U.S. oil rebound

Researchers find state economy ‘firing again on all cylinders’

In the four years since oil prices began to collapse, Texas has led the industry recovery and was the “most resilient” of the top energy-producing states, according a new analysis.

The analysis, by the research firm IHS Markit, found that the Texas economy “is already firing again on all cylinders.” But in the hardest-hit states, such as North Dakota, “it will take time for overall employment levels to recover from the energy-induced recession,” the report said.

From mid-2014 to 2016, prices for Brent crude, the international benchmark, tumbled from more than $100 a barrel into the low $30s. In the wake of the downturn, energy producers scrambled for greater efficiencies as they idled drilling rigs and slashed employees, focusing their investments on their most productive and efficient assets, the analysis said.

The states hardest hit by the oil bust have struggled to return to employment levels that peaked in 2014. The report predicted that it will take 10 years for North Dakota to regain the employment levels before the oil bust.

Oklahoma regained its 2014 peak in 2017; IHS forecasts that Louisiana will hit that mark sometime this year.

Rapid expansion in the Permian Basin has been the main driver in the Texas energy recovery. That growth, however, has led to a lack of pipeline capacity and labor shortages, which, in turn, have provided incentives for producers to ramp up operations outside of West Texas.

“This spillover effect will help some of the fringe plays that are still in recovery mode build momentum again over the next year,” said Karl Kuykendall, principal economist at IHS Markit and author of the analysis.