AUSTIN | Misc. Discussions - No Politics

[lzppjb]

An interesting read about the current oil price war: http://www.vox.com/2014/11/28/7302827/oil-prices-opec

Another article comparing this situation to the 80s re: Russia/USSR: http://www.telegraph.co.uk/finance/c...iet-Union.html

[IluvATX]

$2.00 gas is directly benefitting most everyone right now. If the lenders, oil corporations suffer then who feels it? I think that an extra $1-$2 saved per gallon will benefit the texas economy a lot more than a sulrpus of oil and gas taxes that Austinite's would never see anyways.

[lzppjb]

Who feels it? Their employees when they lose their jobs.

[The ATX]

The feel good headline of saving $1 to $2 is not the whole story by a long shot. It's not just those "evil oil companies" that feel the pain. It's the people and the communities that are hurt by job losses.

[IluvATX]

Originally Posted by lzppjb

Who feels it? Their employees when they lose their jobs.

I doubt many will be laid off because of this... Even so, wouldn't you rather save more cash than worrying about the petroleum industry? I certainly do.

[lzppjb]

I do enjoy the savings. But it's short-sighted to think many, many people could be negatively affected by this. It's going to hurt us, but we can sustain ourselves better than our competitors.

[austlar1]

Originally Posted by IluvATX

I doubt many will be laid off because of this... Even so, wouldn't you rather save more cash than worrying about the petroleum industry? I certainly do.

When this happened in the 1980s, Texas was devastated. The local banking industry basically collapsed and had to be bailed out by the government. The local commercial real estate market also nosedived. It was the era of the "see through" office buildings in Dallas, Houston, and even here in Austin. Also the local residential real estate market was glutted with product as people lost their jobs and either needed to sell their homes or relocate. Texas took almost a decade to recover. This current implosion of oil prices probably won't be as long lasting or produce such a severe downturn, but it is hard to predict and certainly creates uncertainty in banking and lending circles. This could certainly impact decisions being made about providing financing for expensive construction projects in the state.

[The ATX]

Originally Posted by IluvATX

I doubt many will be laid off because of this... Even so, wouldn't you rather save more cash than worrying about the petroleum industry? I certainly do.

The "petroleum industry" is people. Thousands of people with families and mortgages. The "oil companies" and "petroleum industry" are not just a faceless entity. And yes, I very much enjoy saving $ when I fill up my 400+ HP gas guzzling car. (All this cheap gas has me looking at those 2015 Dodge Chargers and Challengers with that 707 HP super charged 6.2 Hemi. ) I'm just saying there are economic repercussions to cheap gas like it or not. An energy sector expert in Houston just said on CNBC this afternoon that thousands of lay offs will happen in Houston alone. Midland/Odessa and South Texas will be hit hard too. Cheap gas is awesome, but some families will suffer. It's just not a simple cheap gas is good and oil companies are bad issue.

[IluvATX]

Originally Posted by austlar1

When this happened in the 1980s, Texas was devastated. The local banking industry basically collapsed and had to be bailed out by the government. The local commercial real estate market also nosedived. It was the era of the "see through" office buildings in Dallas, Houston, and even here in Austin. Also the local residential real estate market was glutted with product as people lost their jobs and either needed to sell their homes or relocate. Texas took almost a decade to recover. This current implosion of oil prices probably won't be as long lasting or produce such a severe downturn, but it is hard to predict and certainly creates uncertainty in banking and lending circles. This could certainly impact decisions being made about providing financing for expensive construction projects in the state.

This is a boom and bust like the 80s, which is typical with any market. What's different is that the banks were practically giving away energy loans back then. Now we(banking industry included) are less depedent on oil, but produce more of it than ever. I realize I can't win a political argument in Texas, but the stories I'm hearing about the current prices are all extremes based on what happened 30 years ago. More jobs will start shifting from oil/gas to renewable energy sources anyways. Oil won't last forever..it's time to focus on new industries.

[lzppjb]

I don't believe oil is as finite as some think. I like to think of it more like earth's sweat.

It ain't going anywhere for a good long while after we're all dead.

[hookem]

Originally Posted by IluvATX

This is a boom and bust like the 80s, which is typical with any market. What's different is that the banks were practically giving away energy loans back then. Now we(banking industry included) are less depedent on oil, but produce more of it than ever. I realize I can't win a political argument in Texas, but the stories I'm hearing about the current prices are all extremes based on what happened 30 years ago. More jobs will start shifting from oil/gas to renewable energy sources anyways. Oil won't last forever..it's time to focus on new industries.

Yes, I agree it is different. The 80's bust, just like in the housing collapse of last decade, was driven by speculation. Lending standards were nothing, and the marketplace was assuming money was going to keep pouring in at higher and higher levels, indefinitely.

The latest boom in Texas has been much different. I don't see companies expanding senselessly and throwing up vanity office towers. Lending standards are much higher, and real estate increases have been due to jobs and demand rather than speculation.

Speaking of jobs, I heard a story about this on NPR this morning. Apparently just to maintain current output levels, 4 new Shale projects would have to start in Texas each year. Expectations were for steady increases in hiring, just to keep up. So experts are thinking that even if oil drops to $40 a barrel, things will simply stop growing so quickly and level off, rather than a bust like in the 80s. It would take a long period of low energy prices to actually start to decrease the total # of jobs. And if that happens, when you have cheap energy the overall economy grows and productivity goes up, so you have that as a potential offset.

[austlar1]

[QUOTE=hookem;6844929]
The latest boom in Texas has been much different. I don't see companies expanding senselessly and throwing up vanity office towers. Lending standards are much higher, and real estate increases have been due to jobs and demand rather than speculation.

Have you taken a drive around Houston or the DFW area lately? There are building cranes everywhere, and in Houston much of the construction has been in clusters of 10-20 story spec office buildings for projected energy related business tenants. Somebody is putting up the money for these buildings which may have a hard time filling with tenants.

I agree that this is not likely to be a repeat of the 1980s bust, but there will be a major slowdown in the energy sector in Texas that will have negative repercussions in banking, lending, retail sales, residential and commercial real estate, property valuations, sales tax revenue, state tax revenues etc., etc. Texas may have a more diverse economy, but the boom-like conditions found in many areas of the state over the past few years have largely been a result of increased production and employment in the energy industry. Austin may be somewhat insulated from this situation, but it is going to be harder to fund projects all over this state for the next year or two at least. There are not going to be a lot of shale oil or fracking projects started with oil pegged at these low prices. Income from existing oil and gas projects will diminish greatly. A lot of wealthy Austin residents and more than a few middle income Austin residents receive substantial income from oil and gas royalties.

[Tech House]

Originally Posted by lzppjb

An interesting read about the current oil price war: http://www.vox.com/2014/11/28/7302827/oil-prices-opec

That was quite an interesting read, and very easy to understand. The complexity is dizzying. There is no economic model that can give a good account of how this works and what is the "correct and rational" strategy for oil producers. I do relish the thought of terrorist financial resources being strained by the price drop.

Originally Posted by austlar1

Interesting, but is it in the best interests of the US to destabilize Russia? It does seem kind of strange that the Saudis are so determined to maintain market share even if it means discounting the price by 40 or 50 percent. They were doing very well with the price near $100 a barrel even before they ramped up production a few years back. Russia has the most to lose here, but I am less clear how it impacts Iran. It sure as hell is not going to be good news for Texas or places like North Dakota or Colorado in the short term. On the other hand the US consumer will have more disposable income.

I share your concern regarding further destabilizing Russia. When the cold war ramped up and the USSR was in a financial vice grip, it was led by the wise and reasonable Gorbachev. Not so today. Putin seems to thrive on annoying the rest of the world while his internal popularity soars. The worse things get, the more he just shifts blame outside and the Russian people eat it up and stand with him. I don't think this is a knock on Russians, but more an indictment of the human mind and our tendency to be for "our team" regardless of any higher-level analysis or objective. This is why I will never participate in the jingoistic ostentatious patriotism that is pushed by the likes of Fox News, always insisting that this is the greatest nation on earth. Without honest self-reflection and humility, we could become the most terrifying and destructive nation on earth. Unfortunately there is no dearth of able and willing competitors for that bottom-dwelling reputation, so we're safe for the foreseeable future.

A very unfortunate aspect of price instability is that it almost always favors big money while squeezing out smaller competitors. Independent oil and gas producers in Texas will be hurting and some will go belly-up, while the fat cats ride it out in comfort with their unprecedented liquidity that they've been accumulating for several years. Temporarily low prices lead to consolidation. Once a wave of consolidation runs its course, it becomes easier to manipulate prices and they'll rise again, assuming that Saudi Arabia satisfies its concerns over market share and gets over the delusion that America is going to quit its march to energy independence.

[KevinFromTexas]

Speaking of Russia, and trying to kick the legs out from under their table, I think it's working.

http://www.bloomberg.com/news/2014-1...e-decline.html

[_Matt]

Interesting editorial about downtown Austin living.

Despite annoyances, living downtown has many pluses

I concluded, “despite the year-round drunks, car alarms, lack of decent public transportation, sirens, nightly loud amplified music played without permits and way beyond the legal decibel limits and cut-off times, distracted and aggressive drivers, deafening motorcycles, traffic congestion, construction noise/dust and the occasional machine-gun fire, we do still like living downtown.”

Those are some serious negatives, but the positives listed below have remained static since we moved:

[Tech House]

Why Austin, and Texas, won't be substantially hurt by the enormous drop in energy prices: it's temporary. An interesting analysis in the link below, and in addition to that I've heard analysts predicting that we'll be back to $3/gallon gas sometime in the spring.

http://www.bloomberg.com/video/oil-p...AgEJiPiQw.html

[lzppjb]

Found this. Thought it was interesting. 1900-1901 Austin Directory. These are the Grocers. I found it searching some names from my family history. P. Bosh Galbreath was my great-great-uncle. He was a well-known deputy sheriff, then I guess he got into groceries here in Austin. His business is listed at 811 Red River, which is now the backyard of Stubb's. He's buried in Oakwood Annex along with my great-great-grandpa and their families.

I thought y'all might like to see just how many grocers were in the downtown area back then.

[Tech House]

Originally Posted by lzppjb

Found this. Thought it was interesting. 1900-1901 Austin Directory. These are the Grocers. I found it searching some names from my family history. P. Bosh Galbreath was my great-great-uncle. He was a well-known deputy sheriff, then I guess he got into groceries here in Austin. His business is listed at 811 Red River, which is now the backyard of Stubb's. He's buried in Oakwood Annex along with my great-great-grandpa and their families.

Thank you for uploading that, it's fascinating! I love these glimpses of how life was in the recent past. The 20th century saw such phenomenal changes, it's hard to really grasp the enormity of it.

On a tangential note, the following series of facts, graphics, and charts gave me a lot of positive feeling about the big picture of human evolution:
http://www.vox.com/2014/11/24/7272929/charts-thankful

[lzppjb]

Another relative owned a place called Famous Coffee House at 514 Colorado in 1922.



In 1922, here are some of their home addresses (note: Hoxie P., P. Bosh and R. Frank):



This information came from the Austin Directory of 1922.

[The ATX]

There's a regional TexMex chain in the DC area called the Austin Grill. The reviews aren't too good on the review sites, and the place just seems to be ripping off Austin's popularity with the name:

http://www.austingrill.com/content/ourstory.html