Brief by Central Staff
Energy – April 2005 – Colorado Central Magazine
We get a lot of summer tourism from the Lone Star State, and it would stand to reason that high oil prices would produce a prospering Texas, which in turn would mean visitors with plenty of money to spend.
But it’s not working out that way, according to an article in the March 7 edition of the Wall Street Journal. Oil prices are over $50 a barrel, and Texas leads the nation in oil and gas production.
So why isn’t its economy booming? “The high cost of gasoline, diesel, and jet fuel are a large enough drag on consumer and business spending to offset the economic lift of high energy prices.”
After the oil boom of the late 1970s followed by a bust in the ’80s, the state’s economy grew more diversified. Energy extraction had accounted for 20% of the state’s economic activity, and now it is only 6%. So high fuel prices don’t help as much of the state’s economy as they did 25 years ago, and they hurt what is now the state’s largest sector, trade and transportation with 23.8% of the economy.
Plus, part of the Lone Star diversification was high-tech in the 1990s, which collapsed in 2000 and 2001. The result was a 25-month recession which ended last August, but the state still lags behind the rest of the U.S. in economic growth.
Thus, we might not hear “Heidi, yawl” as much this summer. Texans might wonder what good it does to elect a president from Texas if their economy has lagged throughout his tenure in office, and we all might wonder what good it does to invade an oil-producing country if the result is record crude-oil prices in this country – a factor that does not bode well for an area like ours that relies so much on auto-based tourism, much of it from Texas.