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Rising oil prices continue lifting overall economy
by Mella McEwen
Midland Reporter-Telegram
- Residents urged to remember oil price levels can have impact, good or bad, on general economy
By Mella McEwen
Oil Editor
Record commodity prices have more than trickled down into the Midland-Odessa economy, they have flowed through the economy as they fuel oil field activity, creating jobs and business along the way.
The cash flow generated by Permian Basin oil and gas activity helped send the April Midland-Odessa Regional Economic Index 6.4 percent higher than last April, according to Karr Ingham, the Amarillo economist who prepares the index.
Obviously, he said, high prices are driving oil and gas activity -- including a rig count that in April rose to 222 rigs at work in the three Railroad Commission districts that comprise West Texas.
"But you have to acknowledge that a substantial drop, even down to $115, could have an impact and cause a modest drawback in activity," he cautioned. "Everyone is uncomfortable with the never-ceasing upward march in oil prices and their impact on gasoline prices and the consumer."
It's important, he added, that Midland-Odessa residents continue to be aware of the impact oil prices have on local economic activity and how they have to walk that tightrope between high commodity prices and their impact on consumers.
Ingham said core economic indicators -- general retail sales and employment -- are settling into what he called a fairly normal range of year-over-growth "but at an impressive level over 6 percent for inflation-adjusted retail activity and 3.4 percent job growth in April and just over 4 percent for the year to date." Ingham stressed these numbers come on the heels of impressive growth over the past several years.
"Consumers can't complain about a 6.1 percent rise in retail sales, though recently it's been as much as 20 to 30 percent higher. At least these numbers look more normal," he said. "There are places in Texas that would kill for 6 percent retail sales growth."
Spending on automobiles slipped a half-point in April over last April but Ingham pointed out that April 2007 spending was 39.3 percent above April 2006, "which makes that number impressive." For the year, spending on automobiles is up 10.5 percent compared to the first four months of 2007.
Midland continues to report the lowest unemployment in the state and ranks near the top in job growth. Ingham reported employment was 3.4 percent higher than last April and for the year-to-date is up 4.1 percent.
Ingham said the current oil boom can be reflected in the hotel-motel tax receipts, which are up 37 percent in the first quarter and up 24.9 percent year-to-date compared to last year.
"Hotel-motel tax receipts continue to be astounding," he said. "In addition to the activity driven by businesses, those hotel-motel numbers are driven by companies renting blocks of rooms for weeks at a time to have a place to house their employees. Who knows where they come from but they get paychecks here, they spend within the metro area. It's a phenomenal thing to witness."
For a second consecutive month, sales of existing homes were higher than the previous year, Ingham reported. In April, 292 homes were sold, up 19.7 percent from 244 sold last April and 950 homes have been sold so far in 2008, up 5.2 percent from 903 sold in the same timeframe of 2007. New home construction also remains high, with Midland and Odessa issuing 81 new housing permits, up 5.2 percent from 77 last April. So far this year, the two cities have issued 295 permits up 16.6 percent from 253 issued a year earlier.
Sale prices are beginning to level off, he added, with the April average price of $163,319 up 7.1 percent from the April 2007 average of $152,475. Year-to-date averages are up 11.7 percent, Ingham said, pointing out previous months saw price increases of 18 percent or more compared to the previous year.
Mella McEwen can be reached at casell@mrt.com.
By Mella McEwen
Oil Editor
Record commodity prices have more than trickled down into the Midland-Odessa economy, they have flowed through the economy as they fuel oil field activity, creating jobs and business along the way.
The cash flow generated by Permian Basin oil and gas activity helped send the April Midland-Odessa Regional Economic Index 6.4 percent higher than last April, according to Karr Ingham, the Amarillo economist who prepares the index.
Obviously, he said, high prices are driving oil and gas activity -- including a rig count that in April rose to 222 rigs at work in the three Railroad Commission districts that comprise West Texas.
"But you have to acknowledge that a substantial drop, even down to $115, could have an impact and cause a modest drawback in activity," he cautioned. "Everyone is uncomfortable with the never-ceasing upward march in oil prices and their impact on gasoline prices and the consumer."
It's important, he added, that Midland-Odessa residents continue to be aware of the impact oil prices have on local economic activity and how they have to walk that tightrope between high commodity prices and their impact on consumers.
Ingham said core economic indicators -- general retail sales and employment -- are settling into what he called a fairly normal range of year-over-growth "but at an impressive level over 6 percent for inflation-adjusted retail activity and 3.4 percent job growth in April and just over 4 percent for the year to date." Ingham stressed these numbers come on the heels of impressive growth over the past several years.
"Consumers can't complain about a 6.1 percent rise in retail sales, though recently it's been as much as 20 to 30 percent higher. At least these numbers look more normal," he said. "There are places in Texas that would kill for 6 percent retail sales growth."
Spending on automobiles slipped a half-point in April over last April but Ingham pointed out that April 2007 spending was 39.3 percent above April 2006, "which makes that number impressive." For the year, spending on automobiles is up 10.5 percent compared to the first four months of 2007.
Midland continues to report the lowest unemployment in the state and ranks near the top in job growth. Ingham reported employment was 3.4 percent higher than last April and for the year-to-date is up 4.1 percent.
Ingham said the current oil boom can be reflected in the hotel-motel tax receipts, which are up 37 percent in the first quarter and up 24.9 percent year-to-date compared to last year.
"Hotel-motel tax receipts continue to be astounding," he said. "In addition to the activity driven by businesses, those hotel-motel numbers are driven by companies renting blocks of rooms for weeks at a time to have a place to house their employees. Who knows where they come from but they get paychecks here, they spend within the metro area. It's a phenomenal thing to witness."
For a second consecutive month, sales of existing homes were higher than the previous year, Ingham reported. In April, 292 homes were sold, up 19.7 percent from 244 sold last April and 950 homes have been sold so far in 2008, up 5.2 percent from 903 sold in the same timeframe of 2007. New home construction also remains high, with Midland and Odessa issuing 81 new housing permits, up 5.2 percent from 77 last April. So far this year, the two cities have issued 295 permits up 16.6 percent from 253 issued a year earlier.
Sale prices are beginning to level off, he added, with the April average price of $163,319 up 7.1 percent from the April 2007 average of $152,475. Year-to-date averages are up 11.7 percent, Ingham said, pointing out previous months saw price increases of 18 percent or more compared to the previous year.
Mella McEwen can be reached at casell@mrt.com.
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Ahmad wrote on Jun 2, 2008 4:33 AM:
I hate and disrespect writers like you. "