Texas is the top state of the U.S. oil industry. Texas began drilling oil in the early 1900’s with the discovery of the Spindletop well near Houston in 1901. Because the oil and gas industry encounters periodic swings, times aren’t always the best. Even with huge natural resources in west Texas, the state has diversified away from the black gold, especially in the metro areas of Dallas, Austin and Houston.
As of 2020, the state’s gross domestic product consists of almost 10% oil and gas. The high activity, however, doesn’t coincide with the same impact on employment in the state. Texas employment for the sector is only 2 percent, a distant level from the 1980’s, when the employment rate was over 5 percent. It was in the 1980’s when Texas really began diversifying into more industries and becoming less reliant on it’s oil business. This has helped the state weather the most recent crises of 2014 and 2020.
In 2014, oil prices fell from $100 to $50. Workers were laid off and many never returned. Activity in the oil fields was cut 70% in the following couple years. This past few years, the oil industry saw a 20% drop in employment. Oil companies found ways to increase productivity, while keeping employment much lower. Productivity gains went from a couple thousand barrels of oil per worker to almost 6000 barrels per worker a decade later.
So how does this affect cities and counties across the state? We know that Midland at the heart of the Permian Basin in West Texas is extremely dependent on oil and gas. Nearly 30% of Midland employment is attributed to the crude industry. Harris County, which includes the Houston area’s major oil companies, contributes only 3 percent of its workforce to the industry. Dallas county has less than one percent and Austin is below 0.5 percent. These employment statistics point to the fact that the metropolitan areas of Texas are much more diversified.
Dallas-Fort Worth is the biggest metro area in Texas and leads the state in overall economic numbers. DFW is home to more than 40 companies in the Fortune 1000. Dallas also has 3 of the world’s largest companies. AT&T, McKesson, Exxon and Kimberly-Clark are just a few of the behemoths located in the Dallas area. DFW has an extremely low cost of living and one of the biggest airports in the country – the DFW International Airport. This bodes well for the economy’s ability to thrive as major infrastructure benefits incoming and outgoing business traffic.
Austin is much smaller than Dallas, but the city has the country’s top population increase for the last decade. Austin is one of the fastest growing cities because of the high-tech industry. The University of Texas provides ample workforce for companies like Dell, Apple and Amazon, totaling more than 40 thousand employees in the large tech companies of Austin. Globalism has made a major impact on the area, especially in the information technology sector.
Oil is no longer the only game in town. Texas has diversified its business into other industries and made the economy much more resilient to handle downturns in the oil industry. Many of the small businesses in Texas look to accounts receivable factoring for operating capital. Banks aren’t always friendly to startups and small, growing businesses that don’t have a war chest of cash or capital. Texas has seen a tremendous growth in factoring companies to serve the state’s booming economy.
Mazon Associates if the oldest factoring company in Texas, with Goodman Capital and KD Factors also long-time factoring companies in the state. Texas has many factoring companies, with Dallas and Houston being the largest providers. Dallas is home to more than a dozen factoring companies that serve most industries, including business services, construction and trucking. Austin is home to several factoring companies and Houston hosts at least 10 to 15 invoice factoring companies.