Is $100-A-Barrel Oil Good For Texas?

Although the state’s economy is more diversified today and not as dependent on energy production, Jim Fuquay’s sources say the answer is still yes. Neither Jim nor his sources, however, take into account what I’ll call “the spillover effect.” The effect occurs when higher prices at no additional cost spill money into the pockets of multi-generational heirs of old oil fortunes whose assets consist primarily of stock in the companies that bought out their forebears. In other words, the old rich are getting much richer–and that money plows back into our local economy. To my mind, the net effect of this investment, while hard to trace, will make the high price of oil even better for Texas than the economists can calculate.

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Comments

3 responses to “Is $100-A-Barrel Oil Good For Texas?”

  1. peterk says:

    Lets not forget that we will probably see more exploration and drilling in Texas as the price of oil stays above $50 a barrel. I well remember the 1980s as the price went north old oil fields that had been plugged and abandoned for years were redrilled because you could now make a profit on the oil

  2. Julie says:

    Poor, poor Wick. Still sticking by that “trickle-down” theory, huh? You were doing well until the phrase “and that money plows back into our local economy.” I’d LOVE to see your defense of that statement.

  3. Daniel says:

    Julie,

    You should know that when he says “Texas,” Wick means “Highland Park.” The trickle-down mechanism is all fine and well, but inflation of oil doesn’t fall under its aegis. It’s naught but “trickle-down inflation” unless you’re the kind of person Wick meets at HP cocktail parties. Wick is correct that it will generate some extra cash flow, but not nearly enough to offset the deleterious effects of inflation on the all-important American middle class. (There are other, probably more important factors to the looming inflation crisis; it’s all a perfect storm.) The job creation of $100-a-barrel oil , meanwhile, is essentially negligible. (Unemployment is the one economic woe we don’t have at the moment, in any case.)