11
Feature
District—has greatly benefited from
the shale boom. The district is home
to four major basins where hydraulic
fracturing and horizontal drilling have
been successfully applied
(Chart 2)
. These
new technologies have revitalized oil and
natural gas output. Crude production
exceeded 3.4 million barrels per day in
late 2014, up from 1.1 million in 2008, and
natural gas production is at levels not seen
since the 1970s.
Booming production and high prices
have increased the oil and gas sector’s
relative importance to the state economy.
The proportion of all jobs in the state
attributable to the sector has been growing,
reaching about 2.5 percent in 2013, up from
a low of 1.4 percent in 2000
(Chart 3)
.
1
The
current high remains well below the peak
in 1982, when almost 4.7 percent of all jobs
were in the oil and gas sector.
The share of total income generated in the
state due to the sector has also grown.
2
As of 2013, the share was estimated to be
about 13 percent, up from the recent low
of 4.1 percent in 1998. Like employment,
the share of income remains well below its
boom-era peak, 19.1 percent in 1981.
Government Revenue Source
For many oil-producing economies, the
government revenue the sector generates
is particularly important. Falling prices
may have additional negative economic
impacts because officials are often forced
to raise taxes or reduce spending to make
up for budget shortfalls.
In recent years, oil and gas taxes have
provided a boon to Texas coffers. Oil- and
gas-related taxes provided about 3 percent
and 1.5 percent, respectively, of total state
revenue in 2013. Their total share of 4.5
percent is up from 2 percent in 2010 and
more than double the recent low of 1.5
percent in 1999. Because Texas taxes oil
on its market value, recent price declines
will reduce this source of revenue and
could crimp government spending.
However, the state is significantly less
dependent on these funds than before.
For example, in 1982, oil and gas taxes
provided over 17 percent of total state
revenue. Texas is also not as reliant on
this source of funding as are many other
oil producers—states and nations where
it can provide one-third or more of total
funding
(Chart 4)
.
Different States, Job Impacts
A model developed for a recent Council
on Foreign Relations report provides
some predictions on how oil price
