Riding the rising tide of energy prices—and the job growth that goes with it—Texas claims the top spot in CNBC’s 2018 America’s Top States for Business rankings.
This is familiar territory for the Lone Star State, which becomes the first four-time winner in our annual study, now in its 12th year. But it has been a long time coming. This is the first time since 2012 that Texas has claimed top honors. Not coincidentally, West Texas Intermediate Crude Oil—the state’s most important export—peaked at just over $108 per barrel that year, a figure it has not seen since. But it has risen enough—around 60 percent in the last year, powering through the $70 per barrel mark in June—to turbocharge the $1.6 trillion Texas economy.
“The Texas economy remains in a broad-based expansion,” said Dallas Federal Reserve economists Christopher Slijk and Jason Saving in a recent report. “The state’s energy sector continues to boom, and areas of the state tied to oil and gas are growing at their strongest pace since 2014.”
Texas has added more than 350,000 jobs in the past year, with the largest increase in the energy sector. Put another way, 1 in 7 jobs created in the United States in the past year was created in Texas.
Texas is home to 39 companies in the Standard and Poor’s 500 index, including AT&T, ExxonMobil and Texas Instruments. And it boasts some of the nation’s largest privately-held companies, including supermarket operator H-E-B, Neiman Marcus Group and Hunt Oil.
With solid economic growth last year — including a torrid 5.2 percent state GDP increase in the fourth quarter — Texas finishes first in our Economy category this year. That is up from No. 25 last year, when oil was priced in the mid-$40s per barrel.
And rising energy prices have a ripple effect, according to Roger Guenther, executive director of the Port of Houston, which is seeing booming traffic in related products, like imported steel pipe. So far, at least, Guenther said tariffs have done little to stem the flow.
“As the price of oil goes up and more drilling occurs, it’s up from 3 million tons a couple of years ago to, we expect, 5 or 6 million tons of steel this year,” he said.
SOURCE: Scott Cohn