We were honored to have Adam Perdue, PhD, whose talk was entitled "Beaumont: Port in the Storm." Adam is an economist at the Institute for Regional Forecasting at the University of Houston's Bauer  College of Business. There he specializes in urban and regional economics, as well as public policy.

 

Adam began his talk explaining that the US economy (and Texas in particular) has benefited from the huge economic growth that has occurred in both China and India. During the past 10 years literally hundreds of millions of individuals in these two countries have gone from essentially subsistence living to, what we call in America, a “middle-class” lifestyle. These individuals, as a result of this economic boom, have seen their incomes rise dramatically.  With this rise in income, millions of families purchased houses, cars, household appliances, and other similar trappings of the middle-class that previously had been out of their financial reach.
 
Many States in the US have benefited from their exports to China and India, but Texas benefited the most due to the huge increase in the consumption of oil in all the third world countries. This increase in demand occurred at the same time that the oil production in the US was increasing dramatically due to the discovery of several shale oil fields and the increased use of fracking. With both demand and supply increasing, oil companies began to expand capacity for all oil related products. As a result, billions of dollars have been invested in new chemical plants and refineries to meet this demand and thousands of new oil wells have been drilled each year.
 
Unfortunately, as the Chinese and Indian economies have started to slow down, the demand for oil and gas has slumped, thereby resulting in a lower price per barrel of oil. This has affected many of the "upstream" oil companies that are involved in the drilling, however, "midstream” companies (that build pipelines and maintain the chemical plants and refineries) have only seen a slight decrease in activities. The manufacturing sector (of the oil and gas industry) has also slowed down slightly, but there are many plant expansions still on the books that should begin construction in the near future. These new projects should continue for the next couple of years.
 
Beaumont is fortunate because many of the employers in our area are involved with the midstream operations as well as the maintenance and manufacturing sectors that have weathered the storm better than most industries. As such, Beaumont should continue to do better than the rest of the country and perhaps even better than the rest of Texas for the next couple of years.  Hopefully by then, China and India will be back on their feet and will provide another boost to the US and Texas economies.