Oil City Prepares for Pain

On Dec. 11 local business leaders packed into a ballroom at the Omni Hotel near downtown Houston for a yearend chamber of commerce luncheon. There was a lot to celebrate. At more than $500 billion, Houston’s regional economy is now the fourth-largest in the U.S. Over the past decade, Houston has added more jobs—628,000—than exist in all of New Orleans. In August, more new-home permits were issued in Houston than in the entire state of California. Twice as much office space is being built there as in New York City.

Despite the Texas-size smiles at the lunch, fear was in the air. A barrel of oil cost $45 less that day than it did in July, the last time prices were over $100. Houston is home to more oil companies than any other city in the world, and a decade of high prices has transformed it. Asked by the moderator at the lunch what they wanted for Christmas, audience members texted in their answers. The word-cloud projected onto a large screen included wishes for a new boat and a BMW X6. At the center in big, bold letters was the top wish: higher oil prices. By the end of the day, oil had fallen below $60 a barrel for the first time since 2009.