OKC Economy

[traxx]

I know when oil prices go down people enjoy the gas prices at the pump but everyone in OKC starts to worry about the economy.

What is OKC doing to mitigate that? Are we actively trying to diversify our economy so that it's not so dependant on energy? I remember reading in Texas Monthly in the late '80s or early '90s that Austin made a conscious effort to diversify their ecomony away from energy and that's how they got into high tech.

[adaniel]

I think some perspective is needed here.

No doubt energy is important to this area, but it's a myth that OKC is not diversified. We have far less exposure to energy than, say, Midland or Houston.

As of now, the energy industry employees roughly 40-50K people in OKC, which sounds like a lot, especially considering that energy jobs pay much higher than the average local wage. Until you figure that the State Government alone employs about 42K people. Also:

Tinker has 27K people, not counting the KC135 expansion coming soon, or private companies like Boeing (which will employ over 2K when their WA transfers are complete).

FAA employs 7K people, which is more than Devon and CHK combined.

At around 4K employees, Hobby Lobby employs more people than either company now and is still growing.

There are 14K people working in OUHSC, with another 12K at the OU-Norman campus.

[traxx]

I think some perspective is needed here.

No doubt energy is important to this area, but it's a myth that OKC is not diversified. We have far less exposure to energy than, say, Midland or Houston.

As of now, the energy industry employees roughly 40-50K people in OKC, which sounds like a lot, especially considering that energy jobs pay much higher than the average local wage. Until you figure that the State Government alone employs about 42K people. Also:

Tinker has 27K people, not counting the KC135 expansion coming soon, or private companies like Boeing (which will employ over 2K when their WA transfers are complete).

FAA employs 7K people, which is more than Devon and CHK combined.

At around 4K employees, Hobby Lobby employs more people than either company now and is still growing.

There are 14K people working in OUHSC, with another 12K at the OU-Norman campus.

Thanks for the info. But even with those employment numbers in other areas, insn't it still true that energy is the driver of OKC economy or at least one of the larger drivers of the economy?

[Teo9969]

There is no driver in an economy the size of Oklahoma City.

If the Feds decided to shutdown Tinker, the effect on OKC would be far worse than oil @ $40/barrel for the rest of time.

That being said, E&P is the one of the major drivers of Oklahoma City's growth, just not OKC's whole economy.

[White Peacock]

There's no such thing as a city with a sole economic driver, but if there's a real bust in the energy sector, OKC is going to hurt. Energy brings the big spenders, which add fire to the economy, attracting more diversification. What happens if the big spenders have to stop spending big? You'd likely see a domino effect of many of the more recent additions to the local economy start to scatter, and we'd risk becoming 1980s-90s OKC again.

Automobiles weren't the sole economic driver in Detroit, but when that went down, the whole city practically did.

[Teo9969]

I don't think what would be necessary for OKC to reach 80s/90s levels of despair is possible these days unless Tinker goes under as well. The 00s OKC energy companies and financial institutions are a lot different than their 70s/80s counterparts, and the civic involvement is at a level that will make such a thing far less likely. There is a big push toward localization all across the country and that helps keep the individual cities more balanced economically.

Again, this isn't a question of trying to maintain what we have…it will take a lot more than $50/bbl oil to erode all of that. This is a question of trying to maintain the momentum we have right now to continue developing and moving forward into a period where OKC is an attractive place because it's OKC, not solely because the city has extra spending money on account of the shale-boom.

[traxx]

There's no such thing as a city with a sole economic driver, but if there's a real bust in the energy sector, OKC is going to hurt.

This is more to my point. I never thought that OKC had only one economic driver and that was energy. Maybe I didn't word it well. I didn't mean for this thread to be about how big of an impact energy is to our economy. Energy was just a starting point to ask the question of what is OKC doing to diversify it's economy so that if there is a bust, we don't have an experience like we did in the '80s.

[GaryOKC6]

Aviation = 3 billion dollar impact & Bio Sciences = 1.8 billion annually in our economy.

[adaniel]

This is more to my point. I never thought that OKC had only one economic driver and that was energy. Maybe I didn't word it well. I didn't mean for this thread to be about how big of an impact energy is to our economy. Energy was just a starting point to ask the question of what is OKC doing to diversify it's economy so that if there is a bust, we don't have an experience like we did in the '80s.

This recent run up in oil prices was largely free of the free wheeling idiocy (i.e. Penn Square Bank) of the last oil rush, so a depression in oil prices won't hurt as much. The 80's crash was just as much of a banking and real estate crash as it was a energy crash.

The previous posts show that this area is indeed much more diversified than it was back in the late 70's/early 80's.

With that being said, a long term depression in prices would hit this area hard. That is what happens when you have an economy that has some sort of industry specialization. Just like how SF was a dumpster fire after tech crashed in 2001 or NYC in 2008 when the supbrime bubble burst.

You really can only "diversify" so much of this risk away; the only way to complete remove this risk is to not have a economy that specializes in anything. Which is absurd in our capitalist system, since you would be sacrificing the gains when these industries are on the upswing.

[bchris02]

You really can only "diversify" so much of this risk away; the only way to complete remove this risk is to not have a economy that specializes in anything. Which is absurd in our capitalist system, since you would be sacrificing the gains when these industries are on the upswing.

Agree with this. There are cities, Little Rock for instance, that has a pretty balanced, diverse economy. They are relatively insulated from big busts but they also miss out on the booms.

[Bellaboo]

As much as we've talked about oil going down, since the April futures of a year and a half ago, natural gas has more than doubled in price. This isn't a doomsday scenario in OKC, yet.

[gopokes88]

We good.

Economists say lower oil prices could harm Oklahoma's economy | News OK

Rickman projected that while Oklahoma would see job growth overall in coming year, the state would lose about 1,000 energy jobs.

Rickman projected that Oklahoma will add about 30,000 new jobs in 2015. The majority of those jobs are expected to be in administrative and support services and durable goods manufacturing, with more than 5,000 new jobs created in each sector.

[traxx]

Maybe I chose the wrong words. I wasn't trying to say that lower oil prices were a doomsday scenario or that we would fall on hard times like the '80s. Brining up energy was just a jumping off point for discussing economy diversification. My real question was, what does OKC do to diversify its economy more? Like I mentioned about the Texas Monthly article, Austin made a conscious effort to not be so dependant on oil.

[OKCisOK4me]

You just answered yourself.

Like Austin, I'm betting the Greater Oklahoma City Chamber of Commerce is always trying to find a way to diversify the local economy.

[adaniel]

Maybe I chose the wrong words. I wasn't trying to say that lower oil prices were a doomsday scenario or that we would fall on hard times like the '80s. Brining up energy was just a jumping off point for discussing economy diversification. My real question was, what does OKC do to diversify its economy more? Like I mentioned about the Texas Monthly article, Austin made a conscious effort to not be so dependant on oil.

I'm interested if you have that Texas Monthly article. I've never thought of Austin having much in the way of an oil industry. Houston, Midland, and Dallas are more oil patch towns. And if they consider themselves diversified because of tech then they've failed badly. Austin was a wreck from 2001-2004ish after the dot com bust, and tech may be in a bigger bubble now.

[bradh]

Texas Monthly pumping up Austin? You don't say...

[KenRagsdale]

Oklahoma City metro nonfarm payrolls seem fairly diversified to me. The Bureau of Labor Statistics shows just under 21,000 jobs in the energy sector as of last month (mining and logging). That seems light, but maybe someone on the forum can drill down these statistics for a more clear picture:

http://www.bls.gov/regions/southwest...lahomacity.pdf

[traxx]

I'm interested if you have that Texas Monthly article. I've never thought of Austin having much in the way of an oil industry. Houston, Midland, and Dallas are more oil patch towns. And if they consider themselves diversified because of tech then they've failed badly. Austin was a wreck from 2001-2004ish after the dot com bust, and tech may be in a bigger bubble now.

That issue was probably 25 years or so ago, so no, I don't have it anymore.

As I recall (and again, I'm going off of a memory from 25 years ago) it wasn't so much about Austin being an oil patch as much as the civic leaders didn't want to be so dependant on one economic factor. At the time, tech was just coming out of geekdom into a more mainstream industry. This was their first move to diversify. Since then, Austin has also moved into pharma and biotech. I don't think they ever thought they'd be completely diversified to the point of having no risk. They just didn't want all of their eggs in one basket.

[ou48A]

Even in Oklahoma there is a lack of comprehension of the scale that the oil and natural Gas industry operates with. There are very few large industries who pay their workers as well as the oil & NG sector.

These are state averages from 2011 that have likely grown by a lot since then.
The average compensation in OKC is very likely much higher than it is in rural areas.
There is a lot of rural oil & NG money (Billions) even from out of state that finds its way to the OKC metro.

With a $52 billion total impact to the state (2011) the OIL & NG sector in our state dwarfs the 3.4 billion dollar state impact that Tinker AF has on our state’s economy who have 27,000 military and civilian employees as shown on the link.

Labor income statewide average compensation per job of more than $113,000.

Industry activity in 2011 set off long run economic impacts estimated to be:
o $52 billion in gross state product, or one out of every $3 in GSP.

o $28 billion in state personal income, or one out of every $5.

o 344,503 jobs, representing one out of every six jobs in the state.

http://www.oerb.com/Portals/0/docs/2...dy%20FINAL.pdf

Many people discount or don’t know that the OKC area employees many thousands of workers who manufacture or provide a service for the oil & NG sector. Some products and services are shipped world wide....Some are significant employers but many would be considered a small business…. This would include business that provided services to energy workers. There are also thousands of construction workers who are kept employed as a result of oil & NG.

Economic impact of Tinker AF
Tinker Air Force Base, Oklahoma - The Office Of Economic Adjustment

[traxx]

^^Wow. Thanks for the data, 48.