the texas gulf coast · beaumont-port arthur. rest of texas. corpus christi. houston. victoria....

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.

2Federal Reserve Bank of Dallas | Houston Branch

Texas Gulf Coast


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


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


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


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


Energy


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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


WTI: $48.20 in Q3:2017


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


Manufacturing Construction& Trade


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.


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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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


-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


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.


Hurricane Harvey


Harvey

Harvey Shut Down Critical Infrastructure

- Refineries & Chemical facilities offline

- Ports shut down, operated with restrictions for weeks


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-1 Landfall 1 2 3 4 5 660

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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.

the texas gulf coast · beaumont-port arthur. rest of texas. corpus christi. houston. victoria....

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