Odessa Joins U.S. Cities Boosted by Energy as Others Lag

Energy Boom Turning Odessa, Tx., Into Fastest-Growing U.S. City
An oil refinery is seen in Odessa, Texas. Photographer: Joe Raedle/Newsmakers via Getty Images

Odessa, Texas, driven by a resurgent oil industry, will grow fastest this year among U.S. cities, followed by energy boomtowns Lafayette, Louisiana, and Bismarck, North Dakota, a new study shows.

Most cities will trail the nation’s 2 percent economic expansion projected for this year, according to the study by IHS Inc. for the U.S. Conference of Mayors in Washington. The report also warned of growing traffic congestion and its costs.

“Lafayette, Odessa and Bismarck will each see robust activity in natural resources,” according to the IHS Global Insight report, with energy industries fueling job growth in the Louisiana city and oil production helping in West Texas and North Dakota. Gains in manufacturing as the national economy recovers are forecast to boost Rust Belt cities led by the Elkhart-Goshen area of northern Indiana.

While growth is projected to continue nationwide, the outlook for most cities varies, with faster expansion in those with economies rooted in professional, business, health and education services, according to IHS. The average rate will be 1.8 percent for the 363 cities studied, with 70 percent expanding 2 percent or less this year. Contractions are forecast in dozens of cities from Reno, Nevada to Dalton, Georgia.

Fracking Role

New oil- and gas-extraction techniques such as hydraulic fracturing, or fracking, have revived output in Texas, which produces the most crude of any U.S. state. It is also fueling a boom in North Dakota, where the Bakken shale-oil formation that reaches into Canada may contain 4 billion barrels of reserves.

Growth is projected at 9.7 percent this year in Odessa, a city of about 100,000 where employment is expected to rise 7.2 percent this year. Expansion is forecast at 7.5 percent in Lafayette and 7.3 percent in Bismarck, according to the study. The Elkhart-Goshen economy will increase 7.3 percent.

Expansion will test transportation facilities particularly in the top 15 metro areas by population, according to IHS. The New York region, leading the list with an economy larger than Mexico’s, will grow 1.8 percent this year and add more than 900,000 jobs during this decade, the study shows. Employment in second-largest Los Angeles, where the economy will expand 1.7 percent in 2012, is forecast to increase by 500,000 by 2020.

Congestion Downside

“Congestion costs,” measured in time and fuel, for each commuter exceeded $1,000 a year in the largest metro areas.

The Chicago area, with the highest congestion costs of $1,568 per commuter, is forecast to experience a 16 percent population increase to 11 million by 2042. The study projects the fastest rates of population growth, which will add to clogged traffic, in cities in the South and Southwest, such as Orlando, Florida, and Phoenix.

Increased investment in transportation infrastructure will help cities continue to lead the nation’s growth, according to a group of mayors who briefed reporters on the report today in Philadelphia. U.S. metro areas accounted for 84 percent of the nation’s job gains since the bottom of the recession, according to the study.

“When you invest in cities, you invest in the recovery of America and put Americans back to work,” said Philadelphia Mayor Michael Nutter, president of the conference.

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