Editor's note: When it comes to Texas, what do you think of? Texas's economic lifeline has been oil for more than a century. But being too reliant on oil has also made the region's economic development extremely unstable. What should Texas do after the oil boom? Texas now has given its own answer and has also embarked on the path of diversification. The New Yorker magazine published a long article detailing the entanglement between Texas's oil economy and the economic "boom-bust" curse it brought. The article is compiled by 36Kr.
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For more than a century, Texas's economic lifeline has been oil. In the public imagination, a wealthy Texan is always an oil tycoon. Austin chalk layer, Barnett Shale, Wolfcamp: These Texas underground layers have produced a large amount of "black gold", so that these names are well-known to oil workers and ordinary citizens.
To a large extent, due to high oil prices, a large portion of U.S. economic growth over the past decade has come from Texas. Its GDP is US$1.6 trillion. If it is an independent country, its economic ranking will be around 10th in the world, surpassing Canada and Australia. California, which has more than 40% of residents, has a GDP of only $2.6 trillion, but since 2000, employment in Dallas and Houston has increased by about 30%, three times that of Los Angeles.
The economic situation in Texas is closely related to oil prices. In 2008, oil prices climbed to $145 a barrel, but plummeted in 2014 and eventually fell below $30. In 2016, the state's employment growth rate was lower than the average water product in the entire country, for the first time in twelve years. 5,000 energy industry companies settled in Houston, the world's oil and gas capital, and the impact of the plunge in oil prices can also be seen from the slowdown in empty office and residential sales. Even the expressway is not as congested as before.
From January 2015 to December 2016, more than 100 U.S. oil and gas producers declared bankruptcy, nearly half of which are in Texas. This figure has not yet calculated the financial impact of pipelines, storage, services and shipping companies that rely on their energy businesses, nor does it include the $74 billion in debt left over from these companies after bankruptcy. As a gesture of sympathy, the Houston restaurant Ouisie's Table, located in the affluent River Oaks area, began offering a three-course meal Wednesday night, which is priced to the price of a barrel of oil. When I visited in early spring of 2016, the meal cost about $38. (Ouisie's Table abandoned the practice when oil prices rebounded slightly. The meal on Wednesday will cost $56.60 as of December 13.)
Now that oil prices have stabilized, Texas' economy has regained its vitality. In recent years, the region has finally begun to diversify, and has surpassed California in terms of technology exports of semiconductors and communication equipment. Conservative politicians in Texas like to claim that low taxes and light regulation are magical forces driving their economy, but oil still makes Texas unique. It is both a gift and a trap.
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The grand story of Texas Petroleum actually started with three oil wells. Around the early 20th century, near Beaumont, near the coast of Louisiana Gulf, there was a Sulfur Mountain called Sour Spring Mound. Natural gas always oozed out of the surface, and boys at school sometimes ignited the hillside. Patillo Higgins, an infamous local businessman who lost an arm in a gunfight with a deputy sheriff, was convinced that there was oil under the mound. At that time, oil well rotation technology was not used, and oil mining was basically done using a heavy drill bit to dig a hole in the formation. However, there was quicksand under the Sour Spring Hill, which made any attempt to dig a hole missed. Still, Higgins insists that oil exists 1,000 feet below sea level, a number he made up.
In 1898, Higgins hired Anthony F. Lucas, a mining engineer, to help him dig a well in the Sour Spring Hill. Lucas' first attempt was only 575 feet before the pipe collapsed.He decided to try a new device called a rotary drill, which is more suitable for penetrating the soft layer. Drilling workers on site also found that the mud drawn from the hole could be made into a kind of concrete, thus supporting both sides of the pipeline. These innovations lay the foundation for the modern drilling industry.
Lucas and his team hope to build an oil well that can produce fifty barrels of oil a day. On January 10, 1901, at 1,020 feet—almost as depth as Higgins’ crazy speculation predicted—mud suddenly spurts out of the well, and the six-ton drilling pipeline was cleared from the top of the crane. No one has seen anything like this, which is terrible. In the subsequent nervous silence, the drilling team was soaked, climbed back to the construction site and began to clean up the ruins. Then they heard a roar from deep inside the earth, an era millions of years ago. More mud was spewed out, followed by rock and gas, followed by oil: a black fountain spewed out of the "artery" wounds made by drillers. This is the greatest oil discovery in history. For the next nine days, before the wells were blocked, hundreds of thousands of barrels of oil were sprayed out every day—a production that exceeded the combined output of all other wells in the United States. After its first year of operation, Higgins named it "Spindletop" and produced 17 million barrels of crude oil per year.
In that era, Texas was almost entirely rural. Without big cities and industries, cotton and wagyu are an important pillar of the economy. "Spindle top" changes that. Because Texans are skeptical about the interests of external enterprises, especially John D. Rockefeller's Standard Oil, two local companies were established to develop new oil fields: Gulf Oil and Texaco. (Both companies later merged with Chevron.) This boom has made some prospectors millionaires, but the sudden oil surplus isn't exactly a good thing for Texas. In the 1930s, oil prices plummeted, so that in some parts of the United States, oil became cheaper than water. This page is the beginning of Texas’s “boom or bust” oil economy model.
In August 1927, Columbus Marion Joiner, a prospector and a liar widely known as "Dad", began drilling oil wells in East Texas. Ruvana had almost no money and was even worse in luck. His first two wells went bankrupt. To attract investors to help him drill another oil well, he forged some geological reports that showed the presence of salt domes and layered rock folds that could capture oil and gas deposits underground. The false report shows that a 3,500-foot deep well will be able to produce one of the world's largest oil reserves. Once again, this crazy prediction proved to be correct.
"Dad" Ruwana's goal is to sit on the Woodbing beach above the Bida limestone layer, where there are numerous dinosaur fossils and crocodiles that appear in the shallow seas of the Cretaceous period. For millions of years, plankton, algae and other substances buried in the sand have turned into oil or natural gas. It took him three and a half years to pay the workers with token vouchers, and to raise enough money to complete the well, he sold $25 in stock to farmers. When it reached 3456 feet, a core sample finally showed oil-saturated sand. Thousands of people gathered together to watch drillers drill and pump at night. Locals—farmers in bib uniforms, ladies in clothing sewn from Sears and Robber’s products—are imagining a life: they stroll along the boulevards in beautiful clothes, price jewelry, weigh investments. For many of them, this dream is about to come true. In the late afternoon of October 3, 1930, a gust of wail was heard; at eight o'clock, oil was sprayed into the air and continued. People dance in the dark rain and children wear oil on their faces.
After a night, new prospectors and major oil producers came here together. Within nine months, one thousand oil wells have been started and operated in East Texas, accounting for half of the total U.S. production.Towns came into being to accommodate bars and hotels that needed to serve drillers. Old-established cities like Taylor, Kilgore and Longview suddenly found themselves in a forest of towering derricks that rose from the backyard and were vaguely visible over the downtown buildings. Texans mined a large amount of oil, and at peak times, the price once plummeted from 10 cents a barrel to 13 cents a barrel. The governor tried to raise oil prices by closing oil wells. In 1930, Juwana was surrounded by lawsuits for his years of reckless commitment. He sold his lease on the oil field to H. L. Hunt, who ended up becoming the richest man in the world. In 1947, Ruvana died in Dallas and was penniless.
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By the mid-1990s, the development of the United States' oil business had lagged behind. The oil industry seems to be on the verge of peak oil, at which time at least half of the world's exploitable oil has been mined. On the other side of this peak is a decreasing return curve. Major oil companies began to focus their exploration efforts outside the United States, where oil reserves were believed to have been more or less exhausted. While the end of the fossil fuel era is not imminent, it is no longer unimaginable.
This situation is cruel to George Mitchell, who became one of the greatest speculators in Texas. He was the son of a Greek immigrant, whose father changed the surname Paraskevopoulos to Mitchell, and ran a shoe shining stall in Galveston. George studied geology and petroleum engineering at Texas A&M University and graduated with the first place in the class. In 1952, he obtained an investment from a gambling company and made a deal in Wright County, northern Texas, known as the "cemetery of speculators", and he obtained the first oil well of his career. Soon he had thirteen oil wells, and later developed into tens of thousands of oil wells.
In 1954, Mitchell received a contract to supply 10% of Chicago's natural gas demand. However, his company, Mitchell Energy Development, operates a decrease in oil wells. He needs to discover new sources of oil, or other energy sources. Mitchell is convinced that the world's fossil fuel is running out. In 1980, he predicted that the traditional American oil resources could last only about 35 years. An obvious alternative is coal, but it has a terrible impact on the environment.
Mitchell's main asset is a lease of 300,000 acres of land seventy miles northwest of Dallas, a region known as the Fort Worth Basin by the oil company. A formation called Barnet Shale was formed one and a half miles below the surface. Geologists have speculated that the Barnett area, which stretches 5,000 square miles in 17 counties, is the area with the largest inland oil and gas reserves in the United States. The problem is, no one knows how to extract these gases. While porous rock formations allow liquid and gas flow, Barnett Shale is "dense rock", which means it has low permeability. In the mid-20th century, prospectors tried to release oil reserves by crushing dense rocks. I tried explosives, machine guns, rocket launchers, napalm bombs, etc., but I didn't succeed. In 1967, the Atomic Energy Commission, in collaboration with Lawrence Livermore Laboratory and El Paso Gas, detonated a 29,000-ton nuclear bomb four thousand feet from the surface near Farmington, New Mexico. More than 30 nuclear explosions followed, which were called the Project Plowshare. It turns out that natural gas can be extracted from atomized ruins, but this gas is radioactive.
70s, a safer and more precise method was invented. Use a liquid stream at high pressure to form micro-cracks in the rock formation (usually in limestone or sandstone) and then thicken the liquid with expensive gels or foams, and add biocides to kill bacteria that may block the cracks. A granular substance made of sand or ceramic is pumped into the cracks, keeping the passages open so that hydrocarbons can reach the surface. This process is called "hydraulic fracturing", or hydraulic fracturing.Although it can effectively release oil or gas molecules in rock formations, this technology has a fatal flaw: the cost of achieving profitability in shale is too high.
In 1981, Mitchell drilled the first oil well in the Barnett Shale, known as C. W. Slay No. 1. It lost money, and so did many oil wells behind it. Year after year, Mitchell continued drilling in Barnett; he invested $250 million in hopes of discovering a better and cheaper fracturing method. Seventeen years later, Mitchell's company was in real trouble. His shareholders began to think he was a weirdo—the company was in debt, and the stock price plummeted from $30 to $10—but Mitchell had been drilling unprofitable wells one by one.
To cut costs, one of Mitchell's engineers, Nick Steinsberger, began researching the fracturing fluid formulation. He reduced the amount of gels and chemicals to make the liquid more hydrated and added a cheap lubricant, polyacrylamide, which is commonly used to produce face creams and soft contact lenses. The resulting "smooth water" - with the help of a layer of sand, acts as a proppant - works very well. It also cuts the cost of hydraulic fracking technology by more than two-thirds.
Mitchell combines his new fracturing formula with horizontal drilling techniques developed offshore, and once you drill deep enough to reach a sedimentary layer, you can drill the drill directly into the cracks in oil or gas, a more efficient way to recover. In 1998, Mitchell made a profit at a C. W. Slay No. 4 in Barnett. The shale revolution is underway. Soon, the hydraulic fracking technology that Mitchell took the lead in the natural gas field was also applied to oil extraction.
Texas has influx into the energy market for the third time in history. In July 2008, oil prices reached an all-time high of $145.31 per barrel, but miners using hydraulic fracturing technology were just getting started. By 2010, there were more than 14,000 wells in the Barnett region alone, and the economic equation of the past Texas boom was: sudden wealth, oversupply, and price plummeted. By January 2016, oil prices had fallen to less than $30 a barrel. “We’re back to the state of 1931,” Robert Bryce told me after the accident, who often wrote about the energy industry. "Once again, oil companies in Texas determine the price of oil in the world market."
A Houston oil tycoon and philanthropist Mack Fowler showed me a chart of how U.S. oil production changes over time. In 1970, the U.S. oil production reached nearly 10 million barrels per day, while in 2008, production slowly declined to the bottom, with production just above 5 million barrels per day. Oil embargo, oil price shock, gas pipelines, shifts in geopolitical alliances, and the Middle East war all had an impact. The world economy is at risk of being controlled by oil countries, and these countries often have strong anti-American sentiment. Then, when Barack Obama became the president of the United States, U.S. oil production rebounded and began to approach its all-time high. On Fowler's diagram, it looks like a flagpole. "Our oil production has almost doubled in five years from 5.5 million barrels per day to 9.5 million barrels per day," Fowler explained. This is the fastest growing oil production ever. Fowler said the difference is advanced hydraulic fracking technology and horizontal drilling technology.
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Recently, I drove from Austin to the C. W. Slay No. 4 oil well. It stands in a small community—old prefabricated houses, brand new brick bungalows—signs an extension of the suburbs of Fort Worth.
The town was once known as Clark, but ten years ago, its mayor struck a deal with a satellite network provider to provide 200 residents with a free basic service for ten years, and in return they renamed the town after the company. Even though the agreement has expired, the satellite antenna is still located on top of many houses there. The town's name is still: DISH.
This area in Texas is a flat grassland with dwarf bushes growing on it.You can see a lot of heavy industrial facilities related to pipelines and drilling.
Oil tanker loads millions of gallons of water to fracturing a well. The trailer that towed the silica to the site had already crushed the road. Each rig is huge and then dismantled and the parts are loaded on 12 trucks. Workers also had to install these 4-inch-long metal pipes, which were up to 30 feet in length, weighing up to 600 pounds each, wrapped in concrete, and carbon steel conveyor pipes between 2 and 3 feet in diameter, which transport gas into storage containers. Each well requires about 1,200 trucks to be transported.
First of all, the drilling hole using hydraulic fracturing method has been drilled. In Barnett, the hole extends downward by 6 to 8 thousand feet, much below the groundwater level. Once the expected depth is reached, the drill bit will bend slowly until level, reaching 1000 feet.
has a science fiction characteristic in the process of hydraulic fracturing. Several tubes called perforation guns are hooked to the end of the wellbore. These guns contain explosives that can destroy surrounding rock formations. Meanwhile, on the ground, about twenty trucks lined up on both sides of the well. Pipes and hoses that came out of the truck were connected to a metal device called a manifold, looking like a giant insect. A powerful sound suddenly erupted as the truck began pumping liquid and proppant into the manifold and oil well at a rate of 508 gallons per minute. A violent jet airflow shot out of the perforated gun, opening new micro-cracks in the shale layer. This process is repeated over and over again until the entire level of the well is exploded. It takes about a month to build an oil well.
C. W. Slay No. 4 The oil well is on a grassy field, covered by a barbed wire fenced cage. It looks small on the surface. Unlike oil wells, there is no hydraulic pump. Instead, the well is covered by a device known as the "Christmas Tree" in the industry - a bunch of pipes and valves that control the flow of natural gas and are transported directly into the olive green condensate tank. On the northern horizon, there is a cloud of black smoke, which may be caused by oil fire or gas combustion.
Hydraulic fracturing is a gift of darkness. It creates a lot of wealth for some people, and a lot of natural gas has reduced energy costs for many people, but it also destroys communities and causes lasting harm to the environment. Like many small towns in Texas, the wells there have become commonplace, so the residents of DISH are anxious. In 2010, the town spent $15,000 on air quality studies and found that benzene, carcinogens and other harmful chemicals were high, but not at known levels that could endanger health. “If you draw a circle around my house with a mile as a radius, there are about 200 wells inside,” former mayor Calvin Tillman told me. When the smell of gas appeared, his child began to have nosebleeds. “One of my son’s nose bleeding was all over his hands,” Tillman recalled. "The blood dripped onto the wall and looked like the murder scene." The next morning, my wife said, "That's it." In 2011, they sold their house at a loss and moved to a community that was not within the bounds of Barnett Shale Field. The nosebleed also disappeared. Since then, additional emission controls have been installed in the wells around DISH.
Fifteen miles northeast of these hydraulic fracturing equipment is Denton on the edge of Barnett. Local residents have also responded to air quality complaints from DISH residents. Denton is now considered the city with the most oil wells in the country. There are oil wells near the school and hospital, and there are oil wells next to the football field near the North Texas University campus.
Balmorhea, Texas, is home to the world's largest spring swimming pool. Attracting tourists from all over the world, there are two endangered fish species here. It is also located in the huge hydraulic fracturing area of Apache. Locals are concerned that natural gas leaks caused by oil wells or earthquakes will contaminate groundwater.
Ed Soph, who had taught jazz studies there, told me, "People think it's going to have health effects." The kids got asthma. Can cause nosebleeds and headaches.Silicon wraps the entire block in dust. There is smell and noise. Children can’t play outside—they get sick, it’s that simple. "He said there are nearly 300 oil wells in the city, and there will be more oil wells in the future. "One-third of the city's land has been used in oil wells. ”
In 2008, there were several earthquakes in northern Texas, and more than 200 earthquakes followed, according to a study by Southern Methodist University in Dallas. The study concluded that the earthquake was likely caused by 1.7 billion barrels of wastewater that were injected into 167 "injected" oil wells in the region to treat hydraulic fracturing fluid. Even though environmental activists recorded twelve earthquakes in and around Irving (the headquarters of ExxonMobil) in 24 hours in January 2015, energy industry executives and state regulators insisted that earthquakes were a natural phenomenon. Sharon Wilson, who had worked in the energy industry, told me: “I issued an alarm from the beginning.” "In 2008, she rented a mineral property in Wise County. "My air turned brown and the water turned black," she said. "I moved to Denton and thought my family would feel a certain degree of security there." "When she opened her luggage, she noticed an oil well was drilling in a nearby city park. George Mitchell has been reluctant to admit that the revolution in fracking that he promoted had devastating environmental impacts. His son Todd, a geologist, recalled: "The strong resistance caught him off guard. "Tord told his father that despite the fact that gas causes less air pollution than coal, the industrial leak of gas — especially methane — may have a worse impact in global warming than coal. George is also beginning to recognize the damage caused by intensive drilling of oil wells to communities. In 2012, a year before his death, he wrote an op-ed in The Washington Post with New York Mayor Michael Bloomberg, advocating for strengthening regulation of fracturing. "The rapid expansion of fracturing has raised reasonable concerns about the impact of water, air and climate — a concern that the industry is trying to cover up," they wrote. "Safe fracturing gas means healthier communities, cleaner environments and reliable domestic energy supplies. ”
Mitchell said a little more concisely to his son-in-law, Perry Lorenz, a real estate developer in Austin, saying: “These damn cowboys will ruin the whole world just to get one percent of the profit.” You have to sit on them. "Unfortunately, Mitchell's request was ignored in Texas.
Sharon Wilson began volunteering for a Denton organization called "geoengineering." In 2014, she participated in a city-wide campaign to ban the use of fracturing. "This should send a signal to the industry that if Texans — where fracturing was invented — could not coexist with it, then no one could do it," Wilson said at the time.
The state's legislature was too dependent on the oil and gas industry and soon passed a law , forbidden any such behavior to recur. Currently, there are few effective ways to seek help in cities in Texas.
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If you have ever flew across western Texas, near Midland and Odessa, you might notice such a landscape that looks like a drawing that stretches hundreds of square miles across flat prairie. Every intersection has an oil or gas well. This is the Permian Basin. "It has more rigs in any province/state on Earth," Robert Bryce (Robert) Bryce said he is a reporter covering the oil industry in Austin. “However, the more oil companies drill, the more oil they find. "Nearly 30 billion barrels of low-sulfur or "sweet" oil are known as West Texas intermediate oils, and they are produced in this region, about the same area as South Dakota, a state in the Midwest, and have much more oil reserves.In the revolution in hydraulic fracturing technology, the Permian Basin can be said to be the most popular oil and gas exploitation region in the world.
Yates Oilfield is located in the Permian Basin in West Texas. More than one billion barrels of oil are produced, making it one of the most productive oil fields in the world.
Oil and gas consulting firm Rystad Energy estimates that the U.S. oil reserves surpass Saudi Arabia or Russia for the first time in history. More than half of the shale gas in the United States is in shale, and technological advances have reduced the cost of hydraulic fracking technology and made it increasingly competitive compared to traditional mining methods. Production in the Permian Basin has doubled to 2 million barrels per day in the past five years, while the break-even cost of an oil well has plummeted to $25 a barrel in the region. This has had a huge impact on more expensive production methods such as coal tar mining and offshore oil drilling.
In September 2016, Houston-based oil and gas exploration company Apache announced the discovery of a new oil field in the Permian Basin called "Alpine High", which is estimated to contain 75 trillion cubic feet of natural gas and 3 billion barrels of oil. The U.S. Geological Survey announced that two months after the discovery of the Alpine Highland oilfield, the U.S. Geological Survey discovered that another area of the Permian, called "Wolfkamp" - might contain 20 billion barrels of oil. This is “the largest continuous oil reserves estimated in the U.S. to date….” Wolfkamp’s gas reserves are estimated at 16 trillion cubic feet. Between 2007 and 2012, estimates of exploitable oil reserves in the Permian Basin increased by more than 800%.
Balmoghea town is located in the huge fracturing area of Apache, home to the world's largest spring swimming pool. Attracting tourists from all over the world, there are two endangered fish species here. Locals are concerned that natural gas leaks caused by oil wells or earthquakes will contaminate groundwater. Apache insists its approach is "safe and reliable" and promises not to drill under national parks containing swimming pools within the city's borders, and preliminary tests of local water supply funded by the company have found no "significant" harmful effects. However, it is hard to imagine that the 5,000 wells required to exploit oil and gas will not cause environmental damage.
Any ecological cost must be compared with benefits, such as decent job opportunities in the region, and taxable income that supports city services. Reducing the United States' dependence on foreign oil and reducing energy costs has undeniable geopolitical advantages. The U.S. now has abundant natural gas reserves due to fracking, which is killing people's demand for coal, and the Trump administration is unlikely to reverse that trend. On Texas' Gulf Coast, facilities built for importing natural gas have now been used to export natural gas. Natural gas is much cleaner to burn than coal, and in the United States, greenhouse gas emissions have dropped to their lowest point in a quarter of a century.
Nevertheless, hydrocarbons produced by leakage from power plants, refineries, gas wells and pipelines have also made Texas the culprit for smog-producing ozone pollutants. Two environmental groups predict that by 2025, oil and gas production will make Texas the most serious incidence of childhood asthma in the United States. The Texas Environmental Quality Commission, like most Texas politicians, almost always stands on the stance of energy companies. The commission claims that it is not worth implementing stricter emission standards for the industry and will not improve public health. The commission insists that exhaust emissions from cars and trucks are the main source of pollution in Texas. In October 2014, the committee's chief toxicologist declared that reducing ozone content "has little public health benefits" - the contrary to the Environmental Protection Agency's conclusion.
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Texas is the only state with its own power grid. It is operated by the Texas Electricity Reliability Commission (ERCot) and is primarily intended to circumvent federal regulations. Due to the strong demand for energy in the oil and gas industry, refineries and petrochemical plants require a lot of electricity (California's electricity consumption is only second in the United States, two-thirds of Texas).However, Texas' electricity prices are cheaper than the national average, and in some places, night power is free. This is because about 17% of Texas' electricity comes from wind power, and at night, when demand is low, wind is usually stronger. There are rows of wind turbines in the plains and central areas of western Texas, as well as coastal areas south of Galveston. They received so much subsidies from the federal government that wind power producers sometimes pay businesses to use up the electricity they generate in order to get a federal tax credit. In October 2016, Amazon founder Jeff Bezos smashed a bottle of champagne on a 300-foot turbine to open a huge new wind farm in Scaree County, three hours west of Fort Worth, which will provide 1 million megawatt hours of electricity to the Texas power grid each year.
The country has invested nearly $7 billion to build high-voltage transmission lines, transporting wind and other energy sources eastward, moving from plains covered with shrubs to cities. On some days, wind power satisfies nearly half of Texas' electricity demand. Although the sun is abundant and very strong, the solar energy generates electricity slowly. 40% of Austin's electricity comes from renewable energy, and its goal is to nearly double that in 10 years. Located thirty miles outside Austin, Georgetown is one of the most conservative suburbs in Texas. All electricity in urban areas comes from renewable energy.
However, the clean energy approach is under threat because the Trump administration is reluctant to continue subsidizing alternative energy sources such as coal and oil.
Mack Fowler's younger brother, Nick Fowler, who runs a petrochemical plant in Odessa. Nick is a rosy man, his eye-catching white hair and beard look like a disguise. He is the so-called "downstream" oil merchant. The upstream oil vendors are those who find oil and provide funds for drilling. Midstream oil vendors are pipeline operators and people who transfer products to refineries and markets. Downstream, Fowler creates a plastic from a byproduct of refined gasoline. “We convert a hydrocarbon into a polymer,” he explained as he took me to the factory. The factory is full of towers, and a maze of pipes and springboards. A time of my childhood was spent in western Texas, and I remember seeing facilities like this sparkle on the flat horizon at night, like an outpost in the Mad Max movie.
Fowler handed me a sample of his final product, a plastic, sticky sphere, known in this industry as "potato". “It’s a polypropylene used for hot melt adhesive,” he told me. "The biggest uses are in assembly of non-textiles, such as feminine hygiene products, disposable diapers, underwear and adult diapers. Our adhesive glues these layers together. Diapers are something with very complex structures."
When Fowler drove me through the factory, he rolled down the window and stopped to talk to three engineers. The factory has been closed due to equipment failure. A polymer transporter heading to the market is already idle, who knows how much wealth it will lose. But the engineers are not worried, and in fact, they all seem to find it interesting and excited because they have an interesting problem to solve. Chief engineer J. J. DeCair speculated what might be wrong—it might be a leak in the condenser.
Later that afternoon, Fowler took me to his country club for supper. On the highway, next to a strip club, there is a 57-acre piece of land where unused oil rigs are stored. Baker Hughes, a large oilfield service company in Houston, publishes a "drill count" every Friday at noon: an indicator to measure the number of new oil wells drilled in the United States. This is the most popular health barometer of the drilling industry. On that Friday, June 17, 2016, there were only 421 drills in the United States working, less than one-tenth of the 4,500 drills that began operating in December 1981 (the highest number on record). On that land, 47 drilling platforms were arranged in a row. "Each piece costs $15 million to $18 million," Fowler said.He estimates that the total investment in idle drilling platforms is $850 million.
We sat down in the empty dining room of the country club and looked through a floor-to-ceiling window as a storm swept through the view. Those idle drilling platforms on the horizon were illuminated by dazzling flashes and looked like ideal lightning rods. People have long dreamed of getting electricity from Texas thunder and lightning. In 2006, a company built an experimental lightning capture tower in Houston, where there were many thunderstorms and huge electricity demand. The company can never get its device to run.
I asked Fowler if he ever thought about leaving Odessa. He said he likes to stay in a place where "the people in the laundry know your name." The main thing is that he offered 210 jobs, which gave him relief. Fracture technology provides energy to the economy of the Permian Basin, but like any other boom, it won't last forever. In the best case scenario, Nick Fowler said the Permian Basin has twenty-five years to go on the dark path. He said, "Fate will change. People will continue to move forward. How can it be any difference in Odessa?"
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If you look at the map of the oil pipelines in the United States, you will be shocked. The United States has 2.5 million miles of pipelines, about one-sixth of which are in Texas. They make crude oil, gasoline, heating oil, aviation fuel and natural gas all over the United States. More than 40% of refined products from Texas Gulf Coast are transported through the Colonial Pipeline, which originated in Houston and has a 5,500-mile journey to New Jersey, and stays in the community along the way. Other routes starting from Houston went to Colorado, California and Arizona. The source of another pipeline is in the Central Region and then runs to Chicago, Toledo and Detroit. Excess gas from northern Texas is sent to Oklahoma and elsewhere to store. More than 30,000 miles of new pipelines are under planning and construction, including the long-delayed Keystone XL pipeline project, which was recently approved by the Trump administration. The project will transport Canadian tar sands to refineries in Texas, which is estimated to carry 800,000 barrels of oil per day.
Before 2017, Texas has not been directly affected by the hurricane since Hurricane Ike hit Galveston in 2008. Ike is just a Category 2 hurricane, but it is one of the most destructive storms in Texas history, causing 20-foot-high waves to influx, killing 74 people. Most political leaders in Texas are complacent about climate change and publicly doubt whether this is happening or whether human activities have anything to do with it. Given the scientific consensus on global warming, it is difficult to interpret this political resistance as a loyal commitment to the oil and gas industry, whose base camp is in the hurricane-hit zone.
In August 2017, a storm called Harvey entered the Gulf of Mexico on the Yucatan Peninsula, where it gathered only enough force to become a tropical depression. However, due to the unusually warm waters in the Gulf, Harvey broke out into a Category 4 hurricane within 56 hours. Harvey landed in Lockport at 10 p.m. on August 25, a fishing village and art settlement in northern Corpus Christi, with winds reaching one hundred and thirty miles an hour. It destroyed the entire neighborhood of Rockport and leveled up other towns in the area. But the wind is not the main threat, it is the rain.
Oil storage tank at a natural gas factory in Ora. Hydrocarbons produced by leakages from power plants, refineries, gas production wells and pipelines have also made Texas the culprit for smog-producing ozone pollutants. Two environmental groups predict that by 2025, oil and gas production will make Texas the most serious incidence of childhood asthma in the United States.
Harvey has brought more rainfall in Houston and surrounding areas than any storm in U.S. history, with 51.88 inches of rain recorded in some areas. Nearly 100,000 households were flooded and up to one million cars were destroyed. The losses are estimated to be as high as $200 billion, almost equivalent to Hurricanes Sandy and Katrina combined.
After Hurricane Harvey, a quarter of U.S. refining capacity has been affected, including the two largest refineries. It took them several weeks to fully resume production. Fires and lightning strikes bring toxic pollutants from storage tanks and petrochemical plants into the air. The ports from Brownsville to Port Arthur were closed. The storm raises questions about the future prospects of the Gulf Coast as a secure reserve for U.S. energy supplies.
However, in the short term, Harvey has little impact on the oil and gas industry. These refineries have recovered without causing significant long-term damage. Gasoline prices soared briefly, but crude oil prices almost did not change. From an economic perspective, even hurricanes are not as powerful as the current oil surplus.
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Texas has never been as rich as Maryland, Connecticut, and other traditional Eastern states. Even Nebraska has more millionaires per capita than Texas. Yet when people all over the world think of Texas, they still think of a lot of money—like the kind of billionaire in a cowboy hat and overalls described in the TV series Dallas. Before the Great Depression of the 1980s, I started hearing the word "unit", a slang term in Texas, meaning you want to be truly wealthy and have $100 million. I can never hear this statement again.
Society that rely on natural resources often have some inherent problems. The limited concentration of wealth—whether it is oil, coal, diamond or bauxite—often leads to corruption and authoritarianism. Venezuela, Saudi Arabia and Louisiana are the main examples. In such a society, economic growth and decline are single. When oil prices rise, the entire Texas economy needs to take a deep breath. Millions abound. Where funds emerge from the ground, luck and willingness to take risks are the main factors that determine a person’s future, not talent, education or hard work. The money that is so easy to obtain is taken for granted. Therefore, those who possess it are either unique greed or divine favors.
In a good year, people will choose to forget. When oil prices soar and construction cranes appear over the city, it’s easy for people to make money, shopping malls are crowded and they can’t even book dinners. Making money is easy. Then the time is to settle the accounts.
In the late 1880s, during the savings and loan crisis, I served on a jury in Travis County, which included Austin. In Texas, many savings and loan companies went bankrupt due to real estate prices crashes that accompanied the decline in oil prices. During the rest of the trial, I walked outside to get some fresh air, and there was a group of people on the steps who squeezed forward and grabbed the pieces of paper being distributed. By then, I was used to the signs of financial distress. The department store is closed. The skyscrapers were vacant. Texas newspapers and banks were sold to out-of-state interest groups, causing us to lose control of information and financial resources, and the banner of “Supply Breakfast Now” heralds the next restaurant to close. One of my neighbors, an engineer working in the city of Austin, lost his house and moved into his Volkswagen van. Before that day, I had never seen a foreclosure property for sale at the door of the court.
I have considered the legacy of the great oil boom in the 1970s and early 1980s, when the oil boom had stagnated. The crisis lasted for twenty years. Where are cultural institutions, schools, and public art? Instead, I’m seeing those shabby shopping malls, fancy beach communities, and ugly car parking, franchised chicken shops and prefabricated warehouses that start from the heart of each city and crawl along our highways like poisonous vines. After prosperity, Texas was considered a society based on greed and impermanence, a civilization that was for acquisition, not for giving. It's weird because Texans are always talking about how much they love this place, but I can't find much evidence about this kind of love.
At that time, the sticker on the bumper said, "Please, God, give me another oil boom. This time, I promise not to mess with it."
Although oil prices have remained above $50 for more than two months, and oil and gas exports are currently at the highest level in U.S. history, Texas has lost more than 70,000 oil and gas jobs since December 2014, many of which have not returned. First, highly competitive fracturing technicians have learned how to automate most drilling processes. There is now a platform that can be assembled by itself or can automatically walk from one drilling point to another.
Houston is the representative of Texas oil economy. The city is a dilapidated, swampy place, notorious for its numerous crocodile holes until the spindle top is hit and it suddenly finds itself the capital of an oil empire. By 1913, there were many oil companies in the city, including the predecessor of ExxonMobil, the humble oil company. “Houston has only one company,” said Stephen Klineberg, founder of the Kinder City Research Center, while drinking coffee recently at a French bakery in Houston. "We do mine oil like Detroit does cars." The city remains an international center of the oil industry. “There are a stagnant pool of water everywhere,” Walter Light, an independent oil maker in Houston, told me.
This city is one of the most immigrants in the United States and eventually began to diversify its economy. For the past 37 years, Kleinberg has been conducting an annual survey of the city's economy. When he started working, oil and gas accounted for more than 80% of Houston's economy; now it is 40%. Houston's Medical Center is the largest medical facility in the world, with more than 100,000 employees and is distributed in 59 medical facilities, covering an area of more than the Chicago Circuit. Houston's port is now the second largest port in the country. Between 2000 and 2014, the city added 700,000 new jobs, almost twice as many jobs as New York City has created. "People's latest survey shows that 81% say that life in Houston is good or good even in a downturn," Kleinberg told me. "Houston is a bad place, but a great place to live."
When I grew up in Dallas, we saw Houston as a blue-collar cousin, which is a great choice if you like country music and barbecue. Despite this, the Washington Post rated Houston as one of the top five restaurant cities in the United States. It also claims to have more theater seats than any city outside of New York — an achievement that demonstrates Houston’s desire to be an international cultural center. "There is a local newspaper that says, 'Houston is trendy.' I called them right away. I told them, 'Houston is not that trendy!' You make it sound like Austin, or something like that. Houston is a world-class city."
Other cities in the state have followed Houston's economy and Texas is finally starting to reduce its dependence on oil. In addition to wind turbine farms, the state has expanded in manufacturing, aerospace, defense and biotechnology. Austin is the fourth largest entrepreneurial ecosystem in the United States. The city of San Antonio has become a cybersecurity center with more than 80 related companies. Although Texas accounts for only 9% of the U.S. population, at least one-quarter of the jobs created between 2000 and 2014 were contributed by Texas.
The infamous boom and bust cycle is not that serious. The Federal Reserve Bank of Dallas reported that oil and mineral-related revenue accounted for only 5% of the state’s total tax revenue, half of the total tax revenue in the 1980s. Angelos Angelou, the state's most respected economist, believes that low oil prices are actually beneficial to the country's economy, a statement that was a heresy a few years ago.
Perhaps in God's consideration, he decided not to give Texas an oil boom.
compilation group produced.Editor: Hao Pengcheng
