Rising Gas Prices Are A Break-Even Proposition For The Texas Economy
From Texas Standard.
Ford announced recently that it will stop making most of its sedans, because the money is in trucks and SUVs. But now, gas prices are climbing, after four or five years without a significant increase. Like everyone who drives, and even those who travel by other means, Texans feel the impact of higher gas prices right in the wallet. But here, there’s a bit of a silver lining, because so much of the economy, and even the government’s coffers, rely on oil revenue. But with the Texas economy more diverse than ever, what does $3-a-gallon gas mean, on balance?
Thomas Fullerton, a professor of economics and finance at the University of Texas–El Paso says gas prices in far west Texas currently fluctuate between $2.60 a gallon up to as much as $3.60.
“We’re sort of headed in the direction of hurricane-level prices again,” Fullerton says.
The large amount of oil production in Texas means that higher gas prices will help areas where the energy sector is important, like the Permian Basin, Houston and Laredo. And higher tax revenues will help the public sector, concentrated in Austin.
Manufacturing is among the sectors that will tend to suffer with higher gas prices, Fullerton say. Businesses that use petrochemicals to make other products will be hurt, too, as the cost of their raw materials increases.
Of course, consumers who drive gas-powered cars will feel the pinch of higher prices, especially if they’ve followed the trend toward energy-drinking large vehicles like those Ford says are its future.
Rural residents, Fullerton says, and others who live far from the places they must drive to, will be especially hard hit.
Fullerton says the diversity of the Texas economy, and the needs of different industries, makes higher gas prices a break-even proposition.
“This would have been a big boost for Texas, back in the Sunbelt years,” he says. “But now, the state economy has diversified so much that it’s a situation where the winners are almost evenly balanced out by those who are going to face tighter budgets as a consequence of higher oil prices.”
Written by Shelly Brisbin.