Anxieties are running high in Texas these days as the oil-rich state wrangles with a bearish crude market. One boom town is already reporting some troubling numbers, as Reuters reports:
Sales tax receipts in the thriving oil town of Midland, Texas, fell this month, only the second decline in five years and one of the first signs of how low oil prices are beginning to ripple beyond oil company bottom lines and into the wider economy.
But worrying signs can be felt outside of Midland, too. Bloomberg reports:
[T]he latest Dallas Fed Manufacturing Index shows some trouble in the Lone Star State…The general business activity index declined from -11.2 to -17.4 in March, vs expectations for a rise to -9.0. The February report also missed expectations, coming in at -11.2 from the previous reading of -4.4.
This is what happens when an industry you rely on goes through a tough time. But while Texas is a major oil producer—in 2013 it was the best-producing U.S. state—it’s also a major gas and wind energy supplier (it led the nation in both in 2013, as well). That diversification will do it no small amount of good in the coming months as the price of oil continues to hover at and below $50 per barrel.
These are early days yet, and so far shale producers have surprised analysts with their resiliency in the face of crashing oil prices. That may change under sustained pressure, but further drilling innovations could allow these producers to continue to turn a profit even at sub-$50-per-barrel oil. The benefits of the shale boom were magnified in Texas, and it stands to reason that woes brought on by a retrenchment will be similarly outsized. Everything is, as they say, bigger in Texas.