How bad will Houston get hit?

[soupcxan]

I know there are several members who live in the Houston area and some who have been in energy much longer than I have...what do you think the fallout to Houston will be of the current low oil prices?

 

[aja8888]

I don't think it will be as bad as the mid 1980's when oil went to $10/BBL. People were abandoning homes (walk a ways) and The North course at The Woodlands was full of houses with plywood on the windows. Boy there were bargains then!

The city is more diverse now and interest rates are much lower keeping real estate somewhat intact. Energy jobs are being lost but a lot of large employers in the area (Exxon, Conoco, Anadarko, etc) seem to be handling this downturn better. Plus, the chemical industry is not hurting as consumers seem to be spending and using all that styrene and other compounds made here.

I suspect the oil services industries will be hurt the most.

But we may be in inning 2 of a 9 inning game here, so only time will tell.

 

[audreyh1]

Houston is much more diversified economically than the 1980s. How did it handle the oil price drop in 2009?

Oil is actually under most of those 2009 levels again now.

 

[soupcxan]

Houston is much more diversified economically than the 1980s. How did it handle the oil price drop in 2009?

Oil is actually under most of those 2009 levels again now.

It bounced back so quick in 2009. Anyone's guess but I don't think it will rebound so fast this time.

 

[audreyh1]

It bounced back so quick in 2009. Anyone's guess but I don't think it will rebound so fast this time.

You mean the price of oil bounced back? It also hadn't been in the stratosphere very long before early 2008.

 

[NW-Bound]

I recall in the early 80s when the oil price tumbled down. It was much cheaper to rent a U-Haul trailer going into Texas than going out.

In the late 70s, when I finished up school, chemical engineers going to oil companies got the highest offers. Things changed extremely quick in just a few years.

 

[Big_Hitter]

I think it will be pretty bad. It has already started.

 

[hpnutty]

Here's my barometer. Every year when school starts up in August I can judge the economy by my commute to w*rk. The longer it takes, the better the economy is. This week it's shorter than it was in the spring. The blue collar job workers have been laid off and the white collar jobs laid offs are starting. As the service companies complete projects the contractors and employees are let go because there are no projects in the queue. CoP will laid off up to 25% between now and the end of the year. BP, Shell and others have started. While folks here say it won't be as bad as the 80s, the worst is still to come.

 

[audreyh1]

Midland went bust. But it was a one show town.

 

[soupcxan]

Here's my barometer. Every year when school starts up in August I can judge the economy by my commute to w*rk. The longer it takes, the better the economy is. This week it's shorter than it was in the spring.

I've noticed this too. But it's only been two days.

 

[aja8888]

I've noticed this too. But it's only been two days.

Around here, it's twice as bad as last year.

 

[Htown Harry]

There are some pretty distinct differences from the worst of the bad times in the 80's.

As noted above, the interest rate environment was the opposite of what it is now and the economy is now more diversified. Another: the savings and loan crisis hit the area hard, particularly in the construction and real estate sectors, a big engine for our local economy.

So far this year, homes sales, home starts and multi-family / commercial building starts remain strong. Sales tax revenues haven't dropped significantly. And government transportation construction spending is likely to go up in 2016 if state and county votes are favorable in November.

While today's damage in the oil and gas business is real, the overall economic picture remains mixed. My memory of some of the worst years in the 80's: bad news in virtually all sectors of the local economy.

 

[LRDave]

Thank goodness I checked this thread! I thought there was a hurricane I had not heard about! Or a meteor!

 

[Big_Hitter]

my dad worked for Hess for 44 years, the last 20 in Houston and retired in 92 - he was a really good geophysicist so he never got laid off but it sure was stressful going through all those down times

best advice he gave me was not to go into the oil biz

 

[Car-Guy]

Here's my barometer. Every year when school starts up in August I can judge the economy by my commute to w*rk. The longer it takes, the better the economy is.

As a long time Houstonian who drove into downtown Houston daily for almost 40 years, I can agree with that. While traffic has gotten steadily worse in Houston over the past 40 yeas (duh) I could absolutely tell the difference in the traffic patterns during energy downturns.

I still drive into Houston every few months. My last trip was about two weeks ago, and by the mess on the freeways, it didn't look an energy downturn traffic pattern to me. Maybe it was because of all the extra road construction and/or closed freeways but traffic was as bad or maybe even worse than ever.

 

[aja8888]

With Exxon building a $4 Billion corporate/research center here in The Woodlands on over 300 acres, traffic is nutty as the 8,000 newly relocated employees and their families move in.

 

[Car-Guy]

With Exxon building a $4 Billion corporate/research center here in The Woodlands on over 300 acres, traffic is nutty as the 8,000 newly relocated employees and their families move in.

And the traffic there (45 North at the Hardy Toll Road) is as about bad as it get's (rivals LA traffic sometimes) The weekend before last when I passed through the area, they had the Hardy closed down. What a mess.

 

[aja8888]

And the traffic there (45 North at the Hardy Toll Road) is as about bad as it get's (rivals LA traffic sometimes) The weekend before last when I passed through the area, they had the Hardy closed down. What a mess.

Hey, I thought I left LA traffic 20 years ago! Now I guess you are right, it followed me!

 

[Cassie]

I'm retired and go mall walking 2x a week at 8am.....it takes a long time just to get out of my subdivision. Other days I try to be out between 9:30am and 1:30pm only because of traffic....and I don't live in Houston (Sugar Land).

 

[Car-Guy]

Hard to tell where Houston stops and other "cities" start anymore in the "Greater Houston Area". Some Examples: Sugerland, Conroe, Spring, Humble, Pasadena, Pearland, Friendswood, Seabrook, Webster, Katy, Jersey Village, Bellair, West University and the list goes on and on.

Sometimes the only way I can tell what city I'm in when driving around in "Greater Houston", is by what police cars are in the area.

 

[soupcxan]

Bumping this thread because crude is $27.50 today. Will my job and/or Houston survive?

 

[ziggy29]

Bumping this thread because crude is $27.50 today. Will my job and/or Houston survive?

I live in the Eagle Ford oil patch and it's rough here, but we're surviving. Some people are being laid off or furloughed, others are still working but have had their hours cut.

Houston learned a lesson from the mid-1980s oil bust. The economy is much more diversified today than it was 30 years ago. The oil bidness is still big there, of course, and there will be pain in that industry and there will be a ripple effect on the local economy and perhaps the housing market, but I can't see it getting anywhere *near* as bad as the last time Houston tanked.

 

[Slow But Steady]

Bumping this thread because crude is $27.50 today. Will my job and/or Houston survive?

Houston will survive. As folks mentioned earlier, it is much more balanced than in the 80's. I remember seeing half-built strip centers in the west side of town during that time. Lots of builders went broke.

As to your job, it depends what you do, and for whom. A good friend is a petroleum landman. He was laid off 6 months ago and his prospects are pretty slim.

I work as an engineer in the petrochemical industry. My company is doing pretty well, and is still hiring.

 

[jabbahop]

I remember going to business school at Rice in mid 80's and half of my classmates were out of the oil patch. Seeing all of the empty strip malls and apartments was quite sobering. I sure hope it isn't as bad for people this time around.


Sent from my iPad using Tapatalk

 

[Htown Harry]

The Chronicle has a quote this morning citing 400,000 jobs created in the region over 5 years. (I assume from 2009-2014.) In stock market terms, for now I think Houston is in a correction, not a bear market.