august-2020-economy-at-a-glance

August 2020 Economy At A Glance

Date: 26 August, 2020 | By : 

“How much of Houston’s economy is tied to energy?”

 

“Is Houston less dependent on energy than it was 10, 20 or 30 years ago?”

 

Energy Defined

Before answering either question, one must first define the industry. Oil and gas has three sectors: upstream, mid-stream, and downstream. Upstream includes exploration, production, and oilfield services. Midstream focuses on the processing, transportation, and storage of crude and natural gas. Downstream involves the refining and processing of oil and natural gas into fuels, chemicals, and plastics. All three sectors are well-represented in Houston.

 

Energy's Contribution to Houston's GDP

Every December, the Bureau of Economic Analysis (BEA) publishes its estimates of gross domestic product (GDP) for all 384 U.S. metro areas. BEA estimates that oil and gas extraction accounted for $20.5 billion (4.3 percent) of Houston’s GDP in ’18. That’s down from $33.1 billion or 7.7 percent in ’14.

 

Metro Houston Employment

Metro Houston added 55,000 jobs in June. That’s on top of the 78,200 jobs added in May. Despite the surge, local employment remains 217,700 jobs below its February pre-COVID level. The largest job gains occurred in restaurants and bars, retail and arts, entertainment and recreation. Government, manufacturing and transportation, ware-housing and utilities and energy continued to lose jobs. Of the major sectors, only finance and insurance has returned to its pre-COVID employment level.

 

 

SNAPSHOT – KEY ECONOMIC INDICATORS

Crude Oil

The closing spot price for West Texas Intermediate (WTI), the U.S. benchmark for light, sweet crude, averaged $40.69 per barrel during the last week of July ’20, down 28.0 percent from $56.05 for the same period in ’19. The COVID-19 pandemic continues to reduce global economic activity. However, oil prices rose in July as OPEC and partner countries maintained production cuts and the United States continued to reduce drilling activity.

 

Home Sales

The Houston area housing market has fully regained its spring losses and returned to pre-COVID sales volumes though the recovery may be short-lived as listings dry up. Houston-area realtors sold 10,975 single-family homes in July ’20, up 23.0 percent from the same month last year and the most ever for a single month in Houston. Year-to-date sales totaled 51,388 single-family homes, up 2.7 percent from the first seven months of ’19.

 

Natural Gas

The cost of consumer goods and services as measured by the Consumer Price Index for All Urban Consumers (CPI-U) rose 1.0 percent nationwide from July ’19 to July ’20, according to the U.S. Bureau of Labor Statistics. Core inflation (all items less the volatile food and energy categories) increased 1.6 percent since July ’19.

 

Rig Count

Baker Hughes reports 244 drilling rigs were working in the U.S. during the second week of August ’20. That’s down 691 rigs, or 73.9 percent, from the same week in August last year.

 

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