Thanks to Shale Production, Permian is the Economic Gift That Keeps Giving


This opinion piece presents the opinions of the author.
It does not necessarily reflect the views of Rigzone.

Over the past few years, two of the fastest-growing cities in the U.S. are Midland and Odessa, a pair of communities separated by a mere 20 miles of interstate roadway deep in the heart of Texas.

These metropolises have not only seen their populations swell to previously unforeseen numbers, but Midland and Odessa also rank first and second, respectively, in terms of economic growth nationwide.

The fact that these two areas have seen this type of expansion is no accident. Growing a city is like growing a business, and growing a business is all about location, location, location. Midland and Odessa have this advantage, as both sit atop the Permian Basin, one of the largest oil reserves in the world.

“The Permian Basin is arguably one of the most, if not the most, important regions when it comes to energy production,” says Bradley T. Ewing, a Rawls Professor of Energy Economics at Texas Tech University. “It has the greatest rig count of any basin or region in the world.”

The activity that both areas have seen in energy production – and the subsequent population boom each city has undergone as result – is proof that safe and responsible oil and gas production not only lowers energy and fuel costs for consumers, but that it also harvests economic stability, strengthens national security, increases median household incomes, and improves American competitiveness worldwide.

According to a report published by Texas Tech University, the total cumulative production for just the Texas portion of the Permian Basin exceeds 29 billion barrels of oil and approximately 75 trillion cubic feet of natural gas. Much of this production comes courtesy of enormous improvements in technology such as fracturing and horizontal drilling.

The mountains of economic fortune that these new safe and reliable forms of drilling have manufactured extend far beyond both city limits. Since 2000, the median household income in Upton County, for instance, has surged 79.6 percent while the average price for a home has climbed by over 50 percent. Small businesses are thriving thanks to the economic and population growth in the area, and more and more families see a brighter future ahead.

This come as no great shock to Ewing, who last year penned a report with university colleagues detailing how the resulting economic impacts of the Permian Basin derive directly from the exploration, drilling, and production of oil and gas, all of which require a multitude of support activities for oil and gas operations.

“These core activities, in turn, lead to a number of non-core but very critical midstream supply chain activities such as pipeline, transportation, refining, and equipment manufacturing,” Ewing says. “The secondary effects of the oil and gas industry include the numerous expansions and continuing operations of suppliers to the industry as well as wholesale, retail, real estate and housing, and financial services, that benefit from the increased dollars generated.

Indeed, for thousands of Texans, shale energy has translated into real savings, economic growth, and job creation. Texas has profited too. According to Ewing’s report, the oil and gas industry in the Texas portion of the Permian Basin sustained more than 440,000 jobs and generated $113.6 billion in economic output in 2013, the same year the oil and gas sector in the basin contributed more than $60.2 billion to the state’s GSP. In all, industry taxes represent 8.4 percent of the state’s budget, which helps fund much- needed state and municipal services and keeps local tax rates stable.

Make no mistake, even with the recent oil price decline, shale energy is helping to spur economic opportunity throughout the Lone Star State, particularly in Upton County and its neighboring cities, Midland and Odessa included. Regrettably, many consumers continue to be misled by special-interest groups like the Sierra Club and Food and Water Watch, intent on stopping energy development of all kinds – and the lower energy and fuel costs and prosperity that comes with it.   

Now more than ever, we need to ensure that everyone takes a moment to fully appreciate how much energy development positively impacts every single aspect of our local and national economies.  The long-term implications of the US Energy Revolution – led by communities like Midland and Odessa – is fundamentally changing our economy and making all Americans safer and more secure.  We must do all we can to stay the course and keep this latest “American Dream” going!

West Texas is evidence that by advancing shale energy, we can bring forth new jobs and new tax revenues that help fund schools, emergency personnel, and local initiatives. Today’s energy renaissance is the latest chapter in our pursuit of the American dream.






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