COMMENT OF THE DAY: WHAT HIGHER GAS PRICES COULD MEAN FOR HOUSTON 
“The 64 billion dollar question for Houston is whether the benefits from a spike in gas prices (i.e. increased activity in the energy sector, more jobs, better wages, etc.) would be enough to offset the significant increase in cost of living that would be associated with higher gas prices. I would suspect that it would not as the cost of housing has already put the squeeze on many household budgets already.” [Old School, commenting on New Oil Company Report Holds Out Houston as Shining Example of a ‘Sprawling Metropolis’] Illustration: Lulu
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I dunno….the cost of housing is mainly an issue in the Inner Loop and some west/northwest areas close to that. There are large parts of outer Houston where the cost of housing is pretty stable. The only areas where the housing market has gone nuts are the areas where most people will have short commutes (and lots of money for the most part). I don’t think this will be putting much of a squeeze on people, but I do think it will do more to encourage development in some other areas of Houston to mitigate long commutes, like east Houston which will cut commutes for people that work at chem plants/refineries, or north Houston for people who want cheaper access to the woodlands etc etc.
Although who knows.
Then again, we could avoid the higher cost of living by buying Tesla’s…you know, since we can all afford one. ;)
The answer is “both.” A dramatic increase in energy prices would just accelerate the great bifurcation of classes in Houston. Business owners and the investor class would get wealthier. The professional class that adds value to enterprises and are difficult to replace would be able to leverage this boom to significantly increase their wages. Inner loop homeowners (generally, though not universally, considered wealthy) would benefit by land prices going up for homes near employment centers. Skilled laborers (welders, master electricians, CNC programmers/machinists, etc), who by income levels are much closer to affluent than poor, would be able to take advantage of the boom by demanding higher wages. But for anyone outside of those classes, they would suffer under higher home energy prices, higher gasoline prices, and increased commutes as close in real estate becomes very unaffordable. Additionally, due to not having marketable, value added, hard to replace skills, they would remain as interchangeable and disposable as they currently are today. Basically, their costs of living would go up without any wage or income increases.
Houston’s economy always benefits from spikes in gas prices, at least insofar as they are connected with spikes in crude oil prices. Ask anyone who has lived in Houston a long time, rich or poor, whether they did better in the late 1970’s or mid 1980’s. Rich or poor, they will tell you the late 70’s was a lot better. The metro population expands rapidly at that means more jobs for everyone at every level.
I suppose that it would depend on what you do for a living. If you work for an energy company or work for a company that sells goods or services to an energy company or to its employees or work for a government entity that subsists on the tax base that local energy companies and their employees and all of the secondary service workers provide, then you probably benefit in some way. Do you compete in the labor market with people that are getting snapped up by energy companies, their secondary service sectors, or local government? Own a house or other real estate? Invest in a local company? You benefit even more.
The only people that definitively lose out are those persons that are not in the labor force, that are not already a dependent of somebody that is in the labor force, and that does not own real estate or a business in Houston.
In theory, I’m pretty sure that Houston could tax itself, redistribute wealth to those people, and still be considerably better off when energy prices rise; but we all know that that won’t happen in any conventional way or in a way that might be more sane than a conventional way…or very likely, in any way at all.
Since Oil&Gas&Derivatives (OGD) makes up such a large part of the economic base of Houston’s economy, if OGD is doing well everyone (who works) in Houston will do better. The question about the gas price spike should be focusing on what causes the price spike. If it is caused by increase in demand for OGD then that is good, if it is caused by an increase in the cost structure of OGD, or a reduction in Houston based production, then that is bad.
“The metro population expands rapidly at that means more jobs for everyone at every level.”
Just to clarify this, the metro population expands with people coming here to fill good jobs that are created, and this creates enormous demand for services, construction, etc. for all the new people, thereby creating jobs for everyone else.
So what happens to Houston and all the high-paying jobs, high-rent apts and development if they decide to allow oil to flow from one of the massive Alaskan fields that supposedly they’ve been sitting on since the 70s in order to crash the market? The whole situation seems fragile to me.
We should totally quit using private cars here in Houston. Set up a great public transit system, bike trails, all that hippie stuff. Then we can rake in the big bucks from all of those suckers stuck in grid lock everywhere else!
Are we talking about gasoline or natural gas? It’s an important distinction to make.