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From oil industrial projects to cyber securities for the US DoD. KBR continues to kill it. They should serve as a model for current oil giants that can use their capital to tap into other businesses.
A new Houston based airline that doesn't fly out of Houston is still providing economic diversity to the Greater Houston economy.
Low-cost Houston-based airline Avelo Airlines became the newest carrier to fly out of Chicago's Midway Airport on May 26.
The airline is flying from Midway to Tweed New Haven Airport in southern Connecticut starting with four-times-a-week service using Boeing 737-700 airplanes.
Avelo, fueled with $125 million in startup capital, was founded by Levy, a former United Airlines and Allegiant Air executive who left United in 2018. The airline raised another $42 million in a Series B funding round in January and has approximately 100 employees based in its Avelo Support Center headquarters at 12 Greenway Plaza in Houston.
According to the airline, it now serves 27 U.S. destinations operating from three bases at Los Angeles' Hollywood Burbank Airport, southern Connecticut's Tweed New Haven Airport and Orlando International Airport.
A better time to make a report on Avelo would’ve been a month ago when they announced their new Orlando base and their new fleet order.
Interestingly, Americas other new airline, Breeze is based in Salt Lake City and also doesn’t fly from SLC although they’re about to change that, as they recently announced flights from Provo.
I’ll post a new article from the Business Journal here since it directly relates to this thread. I also agree pretty much word for word with what this says. Especially the part of neither the downturns nor the booms being as big of a bump to the local economy. I’ll also add, however, that some of the reasons aren’t directly related to the local economy but rather the national economy integrating overall now as compared to before.
Quote:
Houston remains the energy capital of the country, but a new Moody Analytics report indicates the Bayou City has diversified its industry portfolio enough to no longer rely solely on oil and gas.
That's good news when there's a downturn in oil prices. It also means that while oil prices are high, like they are right now, Houston will not see as strong of a production, economic and employment boom as it has historically.
"Houston should have a lot of close links to whatever is happening within the oil price — or if it's not the oil price directly, what's happening with U.S. production with oil," said Moody's Economist Thomas LaSalvia said. "And we see those links, at least subtly within things like the income of the residents there or the general changes to employment, but the magnitude of those [links] has shrunk."
As oil prices rebounded from the historic lows of the pandemic, the energy industry did as well, of course. According to the Texas Independent Producers and Royalty Owners Association's latest report, Texas added 26,700 upstream jobs between April 2021 and April 2022, including 7,700 in Houston.
However, Houston’s energy sector only accounted for 7.9% of the region’s employment and 3.5% of its firms as of 2020, according to Greater Houston Partnership data. And while oil production has ramped up in the past decade, industry employment hasn’t, according to Moody's analysis of Bureau of Labor Statistics data.
After the oil price downturn that started in 2014, "oil companies have become really conservative in making that decision" to increase production and employment, said Moody's Senior Economist Lu Chen, co-author of the report.
Since it can take up to a year from decision-making to drilling, oil companies want to know that prices will remain high before the drilling companies respond with higher production. In addition, labor and material costs associated with oil exploration and production were already high before the oil price surge and have become even more burdensome due to supply chain constraints, labor shortages and inflation caused by the pandemic, the Moody's report stated.
The report mentioned that half of Houston’s local economy is closely correlated with oil and gas related industries, while the other half is influenced by the national business cycle.
Sectors in commercial real estate, like multifamily construction, historically had a strong link to oil and gas employment, according to Moody's analysis of U.S. Energy Information Administration data. In the past, an oil boom would lead to more companies leasing office space, people moving to Houston and purchasing homes, and workers occupying hotel rooms during travel and short-term work visits, Chen said.
But now, as Houston diversifies its economy, these commercial real estate sectors have withstood the volatility of oil and gas and are less likely to crumble when there is a bust, Chen added.
"Hotels are the most sensitive to changes in the oil price, followed by industrial," the report stated. "Retail was the most insulated from oil shock, as many other factors are also reshaping its fundamentals. Multifamily and office do exhibit higher volatilities during each oil boom and bust, but the relationship is fading, especially for the office sector where long leases require more long-term planning that a short-lived fluctuation in oil price may not move the needle."
Basically, Wall Street has forced a change in the relationship of Houston to the O&G economy. After getting burned when the "good times" didn't produce returns, then burned again during the busts, the capital providers have said "no more." Hence the massive investment that traditionally happened during the upswings are now way more muted. The O&G companies and their service providers have a big financial incentive to avoid hiring due to capital providers' constraints. That means, as PS' HBJ article says, our local economy is unable to "feel the boom" but won't feel the bust nearly as badly. Plus, with the attitudes of governments around the world (including to some extent in the U.S.) and consumers becoming less friendly to O&G, there's a whole question of long term O&G market size growth that had seemed like a loopy theory not too long ago.
It's all forcing a sometimes uncomfortable transition for Houston (note that O&G is still 1/2 the economy, per the article), but the items posted by PS and others are sowing the seeds of a new economic era - provided that the Houston community stays vigilant about being competitive for the intellectual, labor, and financial capital that will be needed.
Basically, Wall Street has forced a change in the relationship of Houston to the O&G economy. After getting burned when the "good times" didn't produce returns, then burned again during the busts, the capital providers have said "no more." Hence the massive investment that traditionally happened during the upswings are now way more muted. The O&G companies and their service providers have a big financial incentive to avoid hiring due to capital providers' constraints. That means, as PS' HBJ article says, our local economy is unable to "feel the boom" but won't feel the bust nearly as badly. Plus, with the attitudes of governments around the world (including to some extent in the U.S.) and consumers becoming less friendly to O&G, there's a whole question of long term O&G market size growth that had seemed like a loopy theory not too long ago.
It's all forcing a sometimes uncomfortable transition for Houston (note that O&G is still 1/2 the economy, per the article), but the items posted by PS and others are sowing the seeds of a new economic era - provided that the Houston community stays vigilant about being competitive for the intellectual, labor, and financial capital that will be needed.
No. The article said closely correlated. The article used 7.9% as what the energy sector accounts for the overall economy. What the rest of the “almost half” can be anything where oil is a major customer but not even necessarily the largest.
The Greater Houston economy is being diversified by land, air and sea...
State and federal officials will join Port Houston executives in Galveston Wednesday to officially kick off “Project 11,” a $1 billion expansion of the 52-mile-long Houston Ship Channel.
The project, a partnership between Port Houston and the Army Corps of Engineers, has been in the works since 2010, during which time the Port of Houston has only continued to grow. The greater Port of Houston— Port Houston, the Ship Channel, and the roughly 200 private companies with terminals along the channel—is the seventh-largest in the world, and the largest in terms of waterborne tonnage, according to port officials. It supports more than 3.2 million jobs across the country as well as $800 billion in economic activity.
The growth of the Houston region itself helps explain the increase activity, experts say, as does the expansion of the Panama Canal, which spurred the growth of Asian trade through Houston. Exports to east Asia, for example, have roughly doubled since the expansion was completed in 2016.
Container traffic at the port has more than tripled over the past 20 years, said Patrick Jankowski, senior vice president of research at the Greater Houston Partnership, a business financed economic development group. The port last year handled 3.5 million twenty-foot equivalent units, or TEUs, a measure of container volume, up from 1.1 million in 2001.
Houston, meanwhile, emerged as a global distribution center, adding more than 100 million square feet of warehouse space over the past five years alone.
“That wouldn’t have happened without the port,” said Jankowski. “If we’re to continue to grow as a distribution center, and diversify our economy in the process, we have to invest in deepening and widening the ship channel.”
No. The article said closely correlated. The article used 7.9% as what the energy sector accounts for the overall economy. What the rest of the “almost half” can be anything where oil is a major customer but not even necessarily the largest.
Yes. The 7.9% is direct employment in the energy industry per the article. NOT the overall economy - which the article states is 50% closely correlated. The O&G has huge local multiplier impacts (spending, output, indirect jobs) that relates to the overall size of the economy, that's what "closely correlated" means here. Most other industries in our region have not yet come close to achieving that level of indirect impact - it will take time and a lot more investment.
If you look at the share of employment in actual O&G firms (not quoted here), it seems at first quite small, way under 7.9%. I would assume whoever made that calculation added in employment from certain other sectors. If you're familiar with jobs by industry breakdown of large metro areas, 7.9% is actually pretty high for a "basic" industry (as opposed to a mostly "nonbasic" sector like, say, Retail Trade).
Yes. The 7.9% is direct employment in the energy industry per the article. NOT the overall economy - which the article states is 50% closely correlated. The O&G has huge local multiplier impacts (spending, output, indirect jobs) that relates to the overall size of the economy, that's what "closely correlated" means here. Most other industries in our region have not yet come close to achieving that level of indirect impact - it will take time and a lot more investment.
If you look at the share of employment in actual O&G firms (not quoted here), it seems at first quite small, way under 7.9%. I would assume whoever made that calculation added in employment from certain other sectors. If you're familiar with jobs by industry breakdown of large metro areas, 7.9% is actually pretty high for a "basic" industry (as opposed to a mostly "nonbasic" sector like, say, Retail Trade).
I know what closely correlated means. That’s the reason I corrected. What you’re getting wrong here is that those multiplier effects you’re mentioning don’t start and end with O&G. It just means at some point, there is some revenue from where O&G is responsible whether that’s the largest customer or not.
Of course 7.9 is high for a basic industry. That’s the topic of the article and of this whole thread no? A couple of years ago it was as high as 19% (based off the TAMU reports which do these analysis yearly) and much more before that. Not sure I understand what you’re trying to achieve by saying the same thing in 95% of the posts you make? Speaking of which… if 50% of the local economy started and ended with revenue they came from O&G (which isn’t the case), the last 6 years would have been much much worse than what they’ve been. The considering oil prices were in the negatives at one point, if 50% of the local economy was tied down to revenues from oil alone, then explain the gdp growth? The GDP would have been a never ending downward trend until this year if that were the case.
Not that I disagree either everything in your post, but your post is describing a lit candle as a wild fire.
Last edited by ParaguaneroSwag; 06-01-2022 at 11:16 AM..
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