The Woodlands economy, downstream oil opportunities able to survive falling price of oil

THE WOODLANDS, Texas - Houstonians are used to checking the price of a barrel of oil, or gasoline at the pump, as a sign of a healthy local economy. As oil prices steadily decline, residents may worry that job growth and booming South Montgomery County real estate market are poised for a similar fall. Today's Houston, however, is better insulated from oil worries than it was during the bust of 1989, and downstream oil opportunities for petrochemical producers and manufacturing operations will counterbalance the decline in oil prices to keep the economy and The Woodlands' real-estate market robust.

Oil prices declined over 40 percent during the course of 2014 and dipped below $44 dollars a barrel in trading for the first time since 2009 at the end of January 2015. Oil services firms have begun to respond with workforce reductions, such as the layoff of 7,000 employees by Baker Hughes and 9,000 workers by Schlumberger. Oil producers worldwide are feeling the crunch and oil-and-gas exploration spending is anticipated to drop 17 percent this year, according to Cowen & Co.

"The oil business has two parts: upstream and downstream. While service companies are laying off people—those who are involved in the exploration and development of oil and gas fields—oil companies are still making money downstream," says Priyanka Johri, founder and chairman of Woodlands Eco Realty, a former petroleum geologist for Shell and real-estate broker/owner in The Woodlands, TX "Most oil is used to make petroleum products. There are even products in food. Refineries buy raw oil and have been paying really high prices for years. As the price comes down, they will be able to expand their business."

Johri expects that job loss will be limited to lower-level administrative staff, while employees with technical skills such as chemical engineers adapt from upstream to downstream projects. After the oil bust of 1989, Houston strengthened its emphasis on the area's medical industry and the Port of Houston to counterbalance the importance of oil in the region. In South Montgomery County's strong 2015 economy, other dynamic industries such as the medical field can absorb non-technical staff and workers from oil industry. New facilities for Houston Methodist Hospital and Texas Children's Hospital - The Woodlands, as well as Sam Houston State's construction of a medical school, are in the planning phases.

Business growth in The Woodlands has brought over 2,000 jobs and 1 million square feet of retail space in the past year.

"People continue to pour into The Woodlands area and will keep buying homes. I'm not worried," Johri says. "Oil prices won't stay this low for too long, especially with an election year on the horizon. Look at history—oil prices always come up."

For more information on Priyanka Johri, please visit www.WoodlandsEcoRealty.com, go to www.WoodlandsExecutiveRentals.com, or call 832-277-3577.