Texas Comptroller Glenn Hegar has remained optimistic despite the recent plunge in oil prices. However for the thousands of people laid off, some are asking—how bad can it get?
Oil prices have declined 70% in the past 18 months. In the first two weeks of the new year, prices briefly dropped below $30 dollars per barrel, sparking a lot of concern over what this means for the Texas economy.
So far roughly 30,000 Texas oil and gas workers have been laid off because of the plummeting oil prices, and thousands more are expected to be let go by the end of this year.
“The economy can grow in Texas despite low oil prices,” Texas Comptroller Glenn Hegar said. “We’ve always known that if oil prices go down, they are going to go back up.”
Hegar said that if you take a step back, the state’s overall economy has gained 179,000 jobs in that same time frame, and for 108 consecutive months Texas continued to have a lower unemployment level than that of the national average.
“It’s very serious to the individual. It’s very serious to the company, and it’s extremely serious to those economic regions,” Hegar said. “But if you look and take a step back over the entire state of Texas, a lot of people want to say we are the 1980s. We’re not the 1980s. Texas is a much more diverse economy; it’s much more able to absorb lower oil prices.”
Right now the oil and gas sector takes up roughly 14% of the state’s economy. Hegar said while Texas doesn’t depend on the oil industry as much as it has in the past, he does recognize the importance of the industry in Texas, and is confident that it will bounce back.
“The oil and gas industry is going to be here in Texas to stay,” Hegar said. “There’s light at the end of the tunnel, and right now the question is how far is the tunnel?”
Hegar told state lawmakers in the Senate Finance Committee on Tuesday that the plummeting oil prices won’t have a significant impact on the state government. Hegar assured the lawmakers that the state budget isn’t in jeopardy and that his October “certification revenue estimate” is still accurate.
However, Hegar also said that because of the lower oil prices, the state will send hundreds of millions of fewer dollars towards road construction and maintenance.
“Does it still impact the state treasury? Oh absolutely,” Hegar said. “Does it impact money that goes into our state saving’s account as we call it and also part of that money goes over to funding transportation? Yes. Those have direct, very real impacts.”