ENERGY BOOM:
THE BURDEN OF RICHES
Rebekka Dudensing
Assistant Professor & Extension Economist –
Community Economic Development
ENERGY – A TEXAS INDUSTRY
Texas' Gross Domestic Product (2012)
Government
10.1%
Services
19.2%
Mining & Utilities
15.3%
F.I.R.E. (Finance,
Insurance, and Real
Estate)
12.2%
Information
3.1%
Transportation &
Warehousing
3.4%
Food and Fiber System
8.3%
Retail
4.4%
Construction
4.6%
Wholesale
5.6%
Manufacturing
13.9%
TEXAS DRILLING ACTIVITY, 1960 - 2013
60,000
50,000
Permits Issued
30,000
Oil Wells Completed
Gas Wells Completed
20,000
10,000
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1970
0
1960
Permits/Wells
40,000
ENERGY – A TEXAS INDUSRY
Granite Wash
Barnett
Permian Basin
Haynesville/
Bossier
Cline
Eagle Ford
CHANGE IN THE VALUE OF ONSHORE
OIL AND GAS PRODUCTION, 2000-2011
PRODUCING OIL WELLS
DRILLING PERMITS
INJECTION WELLS
COMMUNITIES WISH THEY’D KNOWN
• Magnitude and characteristics of the population
influx
• Need for hotels and housing
• Traffic congestion and safety and road wear
• Higher wages and higher prices
• Industry-switching (employees to oil industry)
• Water quality
• Law enforcement needs
• Loss of rural lifestyle and community pride
AGENTS WISH THEY’D KNOWN
•
•
•
•
Oil & gas leases
Easement and right-of-way laws and issues
Groundwater concerns
Socio-economic impacts across economy
• Estimating rangeland damages
• Fewer hunting leases
• What the energy sectors bring to the economy
• Needs of families
• Wealth management
• Insecurity of poor families
• All the resources that are available
UNEMPLOYMENT RATES
25
20
Texas
Bee County
15
Burleson County
DeWitt County
Dimmit County
Duval County
10
Gonzales County
Karnes County
Maverick County
Milam County
5
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
POVERTY RATE – ALL AGES
45
40
Texas
Bee
35
DeWitt
Dimmit
30
Duval
Frio
25
Goliad
Gonzales
20
Karnes
LaSalle
15
Live Oak
Maverick
10
Webb
Wilson
5
0
Zavala
2008
2009
2010
2011
2012
POVERTY IN THE PRESENCE OF
WEALTH
•
•
•
•
Poverty rates have not dropped substantially
Median incomes have increased
Rents and other prices have increased
Thus, the poor may be at a greater disadvantage,
compounded by
•
•
•
•
•
Disability
Age (elderly and youth)
Skill deficiencies
Drug use
Criminal records
WEALTH PLANNING
Source: Natural Gas Exploration: A Landowners Guide to
Financial Management. Penn State.
HOW DRILLING AFFECTS TX
INDUSTRIES
•
•
•
•
•
•
•
•
•
•
Drilling oil and gas wells
Food services and drinking places
Architectural, engineering, and related services
Wholesale trade businesses
Securities, commodity contracts, investments, and
related activities
Real estate establishments
Legal services
Transport by truck
Employment services
Offices of physicians, dentists, and other health
practitioners
SALES GROWTH A RURAL WIN
50,000,000,000
45,000,000,000
40,000,000,000
Gross Sales, $
35,000,000,000
30,000,000,000
Eagle Ford
Metro
25,000,000,000
Micro
20,000,000,000
Rural
15,000,000,000
10,000,000,000
5,000,000,000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
VARIABILITY IN SALES GROWTH
2E+09
1.8E+09
1.6E+09
DeWitt, TX
1.4E+09
Dimmit, TX
1.2E+09
Duval, TX
Frio, TX
1E+09
Gonzales, TX
Karnes, TX
800000000
La Salle, TX
McMullen, TX
600000000
Zavala, TX
400000000
200000000
0
1
2
3
4
5
6
7
8
9
10
11
12
VARIABILITY IN SALES GROWTH
Gross Sales by City in Four Eagle Ford Counties
600000000
500000000
Nordheim 307
Runge 1080
Gross Sales ($)
400000000
Falls City 591
Goliad 1975
Yorktown 2092
300000000
Karnes City 3042
Yoakum 5815
200000000
Kenedy 3296
Cuero 6841
Beeville 12863
100000000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
VARIABILITY IN SALES GROWTH
Gross Sales by City in Gonzales County
1,400,000,000
1,200,000,000
Gorss Sales ($)
1,000,000,000
800,000,000
Gonzales 7265
Nixon 2567
Waelder 1177
600,000,000
Smiley 500
400,000,000
200,000,000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
LOCAL TAXES AND EXPENDITURES
• Sales taxes change according to taxable sales levels
• Property taxes
•
•
•
•
Property values increase
Addition of mineral property in production to tax roles
Tax rates have generally declined
Total levies across the districts have generally increased
• Local expenditures have also increased
• Roadways - $426,052.54 to mill and resurface a two-lane rural
road with 5' paved shoulders (Florida DOT)
• Other infrastructure needs – water, sewer, etc.
• Law enforcement
• Wage pressure from higher energy wages
TIPS FOR LOCAL GOVERNMENT
 Know the industry and the pitfalls and best practices from other
regions.
 Identify stakeholders, including potential winners and losers.





industry, environmental, emergency management and other governmental
contacts
Landowners and mineral owners
Schools and educational and workforce agencies
Chambers, EDCs, businesses
Citizens with limited potential benefits
 Evaluate your ability to assess and act on local conditions.
 Road posting and bonding
 Land use
 Workforce training and business development
 Immediate and long-range projections
 Establish open communication and transparent systems to prioritize
and monitor issues.
WHAT AGENTS ARE DOING
• Leasing and easement seminars
• Water screening programs
• Financial/estate planning for instant wealth
• Lessors
• Oilfield employees
•
•
•
•
•
•
Site reseeding programs
Programs on the facts of fracking and disposal
Community beautification and pride programs
Recruited 4-Hers
Got the oil companies to sponsor county programs
Alliances with Chambers and Main Street programs
RESOURCES
• Community and Economic Development
http://communities.tamu.edu/
• Texas Rural Leadership Program
http://trlp.tamu.edu/
• FCS Money Management
http://fcs.tamu.edu/money/index.php
THANK YOU
Rebekka Dudensing
Assistant Professor & Extension Economist –
Community Economic Development
(979) 845-1719
rmdudensing@tamu.edu