(Bloomberg) -- There’s one place in the U.S. where President Donald Trump’s tweeted complaint about rising oil prices isn’t resonating: Texas.
The state where he beat Hillary Clinton by almost 1 million votes in 2016 is booming, thanks largely to a revived oil industry that has seen crude prices rise to more than $68 a barrel from a low of $26.05 in February 2016.
With an economy bigger than Australia’s, the Lone Star state’s jobless rate has moved inversely to crude prices as the rally prompted explorers to step up spending on everything from rig leases to fracking sand. The bottom line: All that drilling has given Texas the fastest-growing economy among major states, with a 5 percent sequential expansion in gross domestic production, based on third quarter 2017 data. Three charts tell the story:
Led by the planet’s fastest growing source of new oil supplies --- the Permian Basin -- energy payrolls in the state skyrocketed 42 percent in February, following a 17 percent hike in January, according to the Federal Reserve Bank of Dallas. And while statewide unemployment hovers at 4 percent, in the unofficial capital of the Permian, the jobless rate is closer to 2.5 percent.
“The Permian Basin economy remains robust in terms of employment, energy and housing,” the Dallas Fed said in an April 19 report. “Companies are having a hard time finding workers.”
“For Texas, the immediate effect of higher prices gets reflected in the rig count,” said Michael Webber, deputy director of the University of Texas’ Energy Institute. “Then, after a lag of a couple of months you see it in the unemployment rate. Longer term, it impact decisions about capital deployment” by oil companies.
Even as Trump bashed the specter of pricey oil, an unlikely champion for Texas emerged from an expected corner: Russian oil czar Alexander Novak on Friday said the rally helped “restore the industry of Texas.” OPEC boss Mohammad Barkindo said American drillers have been enriched by the cartel’s self-imposed supply caps.
“Trump is starting to be a little sensitive to whether or not the impact of tax cuts and things like that are likely to produce the growth he is looking for,” said Katharine Bays, an analyst at Height Capital Markets. “I wonder if some of what he is internalizing here is that these higher oil prices are causing some middle class pain.”
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