Houston is less reliant on the oil and gas industry than it once was, and considerable strides have been made to diversify the economy away from the oil patch. Still, the hard reality remains: Houston’s prosperity and hydrocarbons are intrinsically linked. Decoupling one from the other will be devilishly difficult. The world will derive the preponderance of its energy from oil and gas for decades to come, but market share will continue to diminish, and oil and gas revenue inevitably will stagnate and decline. Developing alternative economic drivers will be challenging, but Houston has the benefit of time on its side. However, the current coronavirus crisis is negatively impacting oil prices and therefore the Houston economy in the near term. Following the shutdown of the global economy to fight COVID-19, the price of a barrel of crude plunged from over $60 — well above the marginal replacement cost from East Texas fields — to less than $20. Although prices recovered to the mid-$30 range recently, they remain below the marginal cost of discovering and extracting a replacement barrel, annulling the incentive to prospect for new reserves or build additional refining and transportation capacity. Indeed, the Houston economy was impacted more …
