Plunging oil prices have ripple effect on state’s economy

AUSTIN (KXAN) —  The ceremonies are over and Texas lawmakers have a lot to figure out when it comes to finances. That partially has to deal with the low gas prices many consumers have enjoyed, but is starting to show a rippling effect in the state’s economy.

On Tuesday, Houston-based energy company Baker Hughes announced it will lay off around 7,000 employees.

“We know circumstances will be difficult for some people. We’ve already seen some layoffs down in Houston,” said Sherri Greenburg, a former Texas lawmaker and current clinical professor at the LBJ School of Public Affairs at the University of Texas. “I think for those [oil companies] that either really were staffed to the absolute max, or for those smaller companies … particularity with the fracking, it’s going to become too expensive for them now; you will see layoffs. With other companies, there maybe some layoffs, but they have the wherewithal to weather this storm and the ability, even with these prices, to continue.”

Late last week, Houston-based Schlumberger said it will cut 9,000 jobs worldwide.

“With gas prices lower that means people have more money in their pockets to purchase other items and that’s beneficial to sales taxes and retailers,” said Greenburg. “On the other hand, if people are laid off it can be different circumstances, so it is a mixed bag.”

Greenburg said she doesn’t believe that history will repeat itself and that Texas won’t fall into the oil bust like it did in the 1980s. With a diversified economy that ranges in health care, technology and alternative energy, she and other experts think the stat is in a different situation than years ago.

“That’s not to say that there aren’t certain areas that will be harder hit than other areas in the state, but the economy really has diversified since the 80s,” said Greenburg.

In the meantime, companies that depend on gas everyday will take advantage of the cheaper fill-ups. Limos of Austin says plunging gas prices have helped keep cost down and rates reasonable. The company said it usually spends about $5,000 in gas a month and because of the oil drop, they have saved about 35 percent.

“Well it doesn’t cost that much to fill it up, so that’s good,” said David Moose, a limo driver for the company.

Greenberg said the drop in oil prices could have an impact on legislators, especially after the comptroller’s estimated $113 billion in revenue for lawmakers to spend. She said that number could be adjusted, but it depends on what happens over the next couple of months.

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