The Greater Houston area will continue to benefit from the region’s continued population growth even though oil prices will likely stay contained in the near future, according to an economic presentation made March 27 to the Missouri City City Council.
Jon Hockenyos, president of Austin-based public policy consulting firm TXP told council members that service-related industries, such as food services and healthcare will do well, naming healthcare as one industry helping to pick up the slack in hiring from energy services amid the oil downturn.
“Industries that serve consumers will continue to grow because people will continue to move here,” he said.
Hockenyos said he expects oil prices to hover between $40 to $50 per barrel in coming years, a result of slack demand for crude in China coupled with increased supplies from relatively new oil sources in the U.S.
Recent production caps implemented by OPEC members will not cause the price of oil to increase, he said, because drillers who pull oil from shale reserves can turn a profit as long as oil sells for $50 to $60 per barrel.
“When those domestic guys jump in it works counter to what OPEC is trying to do to drive up prices,” Hockenyos told council members. “It creates a surge in the supply. It’s going to be tough for oil to stay above the mid-50s in my opinion. I think oil will stay at around $45 a barrel.”
Like other municipalities, Missouri City can expect to see its sales tax revenue stay flat, as more purchases are made online, as many of those purchases not being subject to sales tax.
“Sales tax has never been a dependable revenue source,” said Council Member Jerry Wyatt. “That’s the problem with sales tax.”
Missouri City’s unemployment rate ticked up in 2016, from 4.5 percent to 5.2 percent, reversing five consecutive years of drops that began when the rate was at a peak of 8.3 percent in 2010, the height of the global financial crisis.
Hockenyos said the increase was “consistent with the pattern of the overall regional economy.”
“Things aren’t as robust as you’d like them to be, but they’re better than five years ago,” he said.
The presentation was made as Missouri City officials begin work on preparing the city budget for the coming fiscal year.
The city’s budget is due to be submitted on May 31, with public hearings scheduled for June, according to Edena Atmore, financial services director. Public hearings on the amended budget will be held in September, she said.
After the meeting, Mayor Allen Owen said the report from TXP yielded few surprises.
“Staying flat is better than going down,” Owen said.