Dec 10, 2012
Bill McMeekin
Bill McMeekin
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Energy: Fueling the Surge in Per Capita Income

Industry: Natural energy, oil drilling

If you need further proof of how the energy sector is fueling the  economy, take a gander at a breakdown of new data on personal incomes from the U.S. Bureau of Economic Analysis.

Of the top 20 metro areas in percentage increase in per capita incomes between 2009 and 2011, an overwhelming majority are in places where there is major exploration and production for oil, natural gas or both.

Not surprisingly, the Texas oil patch is well represented. The inflation-adjusted per capita income in Midland is up nearly 20 percent  since 2009, while in adjacent Odessa, it’s up nearly 14 percent.The inflation-adjusted average for the country is about 2.6 percent.

Texas, of course, is a major center of energy production, and the industry delivers economic impact in the state of more than $19 billion. East Texas is another region with significant oil production. In Longview, per capital income is up nearly 7 percent since 2009. It’s the same story on the Gulf Coast, where Corpus Christi is in the center of the huge Eagle Ford Shale play.

The energy boom isn’t just a Texas phenomenon, and it is helping to drive up per capita incomes in some locations that have experienced difficult economic conditions.

Bakersfield CA, which has a long history as oil and natural gas producing region, has seen per capital incomes grow nearly 6 percent. Williamsport PA, where the Little League World Series is played each year, has hit a home run thanks to the Marcellus Shale, a massive shale play that runs from the Southern Tier of New York state through western and central Pennsylvania and into eastern Ohio and West Virginia.

In North Dakota, oil production reached record levels in summer, and it is not only driving up per capita income in places like Bismarck and Grand Forks, but  creating the lowest jobless in the country and a $1.6 billion surplus in its two-year budget through 2013.

The top five oil producing states in 2011 were: Texas 2) Alaska 3) California 4)  North Dakota and 5)
Oklahoma And the top five natural gas producing states: 1) Texas 2) Alaska 3) Louisiana 4) Wyoming and 5) Oklahoma

Fifteen of the top 20 metros in increase in per capita incomes are in one of those top energy producing states.


Sociologist, researcher,  author and urban development expert Richard Florida has added his voice to the stir created by last week’s New York Times article on incentives.

In an article on The Atlantic Cities titled The Uselessness of Economic Development Incentives, Florida leaves no doubts on where he weighs in on the debate. Florida says his own research can find no link between incentives to encourage investment or job creation and increases in per capita and average wages or incomes, an increase in college grads or knowledge workers, and in lowering state unemployment rates.

“The bigger issue is that incentives do little to alter the locational calculus of most companies,” he writes.  “The broad body of evidence on incentives, including the Times series, finds that incentives do not actually cause companies to choose certain locations over others. Rather, companies typically select locations based on factors such as workforce, proximity to markets, and access to qualified suppliers, and then pit jurisdictions against one another to extract tax benefits and other incentives.”

So, that begs the question: Will this debate lead to real changes in policy or strategy by local or state governments on the use of incentives? Do you see your community deciding that the price of attracting investment and jobs may not be worth the cost? Share your thoughts.


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