October 4, 2018

Oil & Gas in the Southwestern States Continues to Drive National Economic Boom

The US is enjoying a breakout year in GDP growth, smashing the 4% barrier that many deemed “impossible” only two years ago. One of the primary catalysts for America's current economic boom is the rapid expansion of oil & gas extraction in the Permian Basin. Texas and New Mexico (NM), the two states that share the Permian Basin shale reserves, have recently transformed the country into a net energy exporter. The two state legislatures have fostered this economic growth by aligning themselves with the orientations of oil service companies and exploration in general. Other states, like California (putting a ban on offshore drilling) and Colorado (with its pending ballot on Proposition 112) are, from a relative standpoint, suppressing potential growth based on fears that in many instances are overblown. A quick overview gives us a measure of how the latest boom connects to different states: In the last year alone, NM has constructed 104 oil rigs – a 67% increase versus 12 months ago with an official 50% boost in production; Texas and Colorado have experienced a 29% production growth followed by North Dakota and Oklahoma with a 19% growth. Also, Wyoming, Louisiana, and Alaska have surged after some dormant years. When we get down to the nuts and bolts, it is evident that states built on natural energy reserves combined with accommodating legislature are crucial to the expansion of America's GDP growth. The most significant benefit for this economic boom is the tax revenues funding state infrastructures like schools and new highways. For example, NM with the latest injection of 1.2 billion-tax revenue has dug itself out of a severe deficit that was depleting already thin reserves. Texas is splitting its $2 billion tax bonanza between saving for the future and road renovations. The state’s rainy-day funds, underpinned by joint oil-tech diversification, are the favored way to protect against the downs of economic cycles. Finally, the big eye-opener is the domino effect that oil and gas have had on secondary industries. Based on prolific strides made in drilling automation, employment growth inside the industry itself has been relatively modest versus service businesses, retailing, restaurants, and general entrepreneurship. Nationally, oil and gas jobs grew by 17,000 over the last five months but directly spawned an extra 186,000 jobs in the business services sector and close to 79,000 in construction. Overall, the US economy has a lot to thank the energy sector for, and this trend looks to continue for the foreseeable future.


Chase Energy Services

Chase Energy Services is one of the largest privately held integrated oilfield services company in the US, providing end-to-end oilfield services through an experienced management team, innovative technologies and an unrelenting focus on safety. With more than 500 employees, the company serves customers across Southwest New Mexico and West Texas in frac and acidizing, well construction and completion, cementing solutions and well servicing. learn more