The Texas Gulf CoastOverview and Outlook
Federal Reserve Bank of Dallas – Houston Branch10/18/2017
Jesse Thompson
The views expressed in this presentation are strictly those of the presenter and do not necessarily reflect the positions of the Federal Reserve Bank of Dallas or the Federal Reserve System.
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Texas Gulf Coast
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Texas Gulf CoastThree main factors are shaping the Texas Gulf Coast outlook
• Energy Industry Boom-Bust-Recovery
• Petrochemical Manufacturing & Construction Boom & Energy Exports
• Hurricane Harvey
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95
100
105
110
115
120
125
2009 2010 2011 2012 2013 2014 2015 2016 2017
Index, Jan 10=100
Rest of TexasHoustonChorpus ChristiBeaumont-Port ArthurVictoria
NOTE: Victoria data seasonally adjusted using x12.SOURCE: Bureau of Labor Statistics; adjustments by the Dallas Fed.
Gulf Coast Metro Job Growth Follows Different Paths
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3
4
5
6
7
8
9
10
2014 2015 2016 2017
Percent
BeaumontCorpus ChristiVictoriaHoustonTexas
SOURCE: Bureau of Labor Statistics.
Gulf Coast Unemployment Follows Oil-Bust & Recovery, ticks up on Harvey
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80
90
100
110
120
130
140
150
160
170
2010 2011 2012 2013 2014 2015 2016 2017
Index, Jan 07 = 100
Beaumont-Port ArthurRest of TexasCorpus ChristiHoustonVictoria
NOTE: Data are seasonally adjusted, centered five-month moving-averages.SOURCE: Texas Association of Realtors and the TAMU Real Estate Center; Author's adjustments.
Gulf Coast Existing Home Sales
Gulf Coast home sales dipped 17.9
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Energy
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210
240
270
300
20
50
80
110
2014 2015 2016 2017NOTES: Rig count and nominal price of West Texas Intermediate crude oil indexed to June 2014 = 105.79. Dotted lines are estimates based on data available through Sept. 22.SOURCES: Energy Information Administration; Baker Hughes; Bureau of Labor Statistics; adjustments by the Dallas Fed.
Rig countCrude oil price
U.S. Rig Count and Houston Energy Jobs
Average oil price needed to drill in the Permian Basin
Selected mining-related jobs
Thousands of jobsIndex, June 2014 = 105.79
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WTI: $48.20 in Q3:2017
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120
195
270
345
420
30
45
60
75
90
2016 2017
RigsRigs
SOURCE: Baker Hughes
Eagle Ford
Permian
Eagle Ford Rig Count Falters Mid-Year
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Manufacturing Construction& Trade
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Hydrocarbon Exports Surge
– Gasoline and diesel exports Up 60 percent from 2010 to 2016.
– Crude exports up from nearly zero to over 0.3 mb/d
– Texas now Exports LNG– NGL exports Octupled.
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74
78
82
86
90
94
98
10230
60
90
120
2013 2014 2015 2016 2017
Index, Jan '88=100(axis inverted)
Index, Jun ’14=100
NOTE: Trade data for Houston-Galveston and Port Arthur Customs Districts. Data displayed are centered three-month moving-averages, seasonally adjusted where appropriate.SOURCES: Census Bureau; Dallas Fed; Energy Information Administration.
Value of trade
West Texas Intermediate oil price
Texas value of the dollar
Coastal Trade Value
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74
78
82
86
90
94
98
10230
60
90
120
2013 2014 2015 2016 2017
Index, Jan '88=100(axis inverted
Title
NOTE: Trade data are for Houston-Galveston and Port Arthur customs districts. Data displayed as centered three-month moving-averages, seasonally adjusted where appropriate.SOURCES: Census Bureau; Dallas Fed; Energy Information Agency.
West Texas Intermediate oil price
Texas value of the dollar
Vessel weight (volume)
Coastal Trade Volume Up Rising
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-7.8
6.9
-21.7 -23.1
-5.0 -2.0-10.5
4.68.8
-1.7
16.0
87.2
-40
-20
0
20
40
60
80
100
Chemicals Plastics & Rubber Petroleum & Coal Products Oil & Gas
($40) ($4.7) ($43) ($25.5)
2015 2016 2017
Annual Percent Growth
NOTE: Data in parenthesis are year-to-date real annualized Texas export values in billions of dollars through 2017:Q2.SOURCE: U.S. Census Bureau and Wisertrade.
Hydrocarbon Exports Up
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Super-cycle of investment in new chemical capacity along the Texas Gulf.
– Real Exports of Plastic Products up 50 percent 2010 to 2016.
– Texas has 73% of U.S. Steam Cracker Capacity –Set to rise by 30 percent or more.
– The Petrochemical Construction job Boom has likely peaked.
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Hurricane Harvey
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Harvey
Harvey Shut Down Critical Infrastructure
- Refineries & Chemical facilities offline
- Ports shut down, operated with restrictions for weeks
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24
25
26
27
28
29
30
31
32
-1 Landfall 1 2 3 4 5 660
65
70
75
80
85
90
95
100Thousands of Railcars
Weeks Since Landfall
Percent
NOTES: Data are quarterly. Percentages in parentheses are vacancy rates; the multifamily vacancy rate is for apartments. Second quarter 2017 construction values are estimates.SOURCE: Association of American Railroads; Energy Information Administration.
Downstream Activity Recovers on Gulf Coast
Chemical Railcar Loadings
Refinery Utilization Rate
20
3,360
3,385
3,410
3,435
3,460
3,485
Jan-2017 Jul-2017 Jan-2018 Jul-2018
Thousands of jobs
NOTES: Chart depicts modeled impacts to Gulf Coast jobs from Hurricane Harvey based on different dollar values of direct damages. "Gulf Coast" includes the metropolitan areas of Corpus Christi, Victoria, Houston–Woodlands–Sugar Land and Beaumont–Port Arthur.SOURCES: Bureau of Labor Statistics; National Oceanic and Atmospheric Administration; analysis by the Dallas Fed.
Projected Effect of Hurricane Harvey on Gulf Coast Employment
Baseline projection
$100 billion impact from Harvey$75 billion impact from Harvey
Federal Reserve Bank of Dallas | Houston Branch
The Texas Gulf CoastOverview and Outlook
Federal Reserve Bank of Dallas – Houston Branch10/18/2017
Jesse Thompson
The views expressed in this presentation are strictly those of the presenter and do not necessarily reflect the positions of the Federal Reserve Bank of Dallas or the Federal Reserve System.