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Energy boom excess lives in Texas
August 24, 2012
   
   
Can you guess what the following metropolitan areas have in common?

Odessa, Texas; Columbus, Indiana; Midland, Texas; Gainesville, Georgia; Blacksburg-Christiansburg-Radford, Virginia; Laredo, Texas; Holland-Grand Haven, Michigan; Elkhart-Goshen, Indiana; Naples-Marco Island, Florida; Lafayette, Louisiana.

Who would ever guess that these metros created jobs at the fastest rate in the last 12 months between June 2011 to June 2012?

In Texas, Laredo, Midland and Odessa have benefited largely from an energy boom. But it hasnaEUR(TM)t stopped there. In Midland and Odessa, the boom has spread to other sectors such transportation, real estate and retail. In LaredoaEUR(TM)s case, an increase in cross-border trade has created other opportunities aside from drilling in its local shale. Typically, increased exploration and production can give rise to transportation, namely, the movement of raw materials or freight. Increased demand means more business and more business means more office space. Of course, you need workers to occupy that space, which has led to an influx of migrants and ultimately a shortage in housing. ThataEUR(TM)s exactly what happened in these cities. The energy boom has created tight housing markets, which has ultimately triggered a rise in permits and construction.

How sustainable is such a boom over time and what will happen to these cities if demand falters? That is a question for economic development officials to ponder. Perhaps new industries will form or expand in these locations as businesses see potential opportunities resulting from their proximity to skilled workers. The advantage of lower business and housing costs also provide further incentives for longer term sustainability. But for now, good times are rolling in these Texas cities.