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Houston's Role in Global Energy Transition a Major Focus of Greater Houston Partnership Annual Meeting

Published Jan 23, 2020 by A.J. Mistretta

2020 Partnership Chair Bobby Tudor

HOUSTON (January 22, 2020) - Greater Houston Partnership 2020 Board Chair Bobby Tudor outlined how the organization will work to ensure Houston plays a key role in the global energy transition at the Partnership’s annual meeting on January 22. 

Read the remarks from Bobby Tudor and Bob Harvey and see Bobby Tudor's slide presentation. Watch the full meeting below. 

Maintaining Houston’s place as the Energy Capital of the World requires that the region’s business and civic leaders address the dual challenge of meeting expanding global energy demand while lowering the world’s carbon footprint, said Tudor, Chairman of Tudor, Pickering, Holt & Co. LLC, an energy investment and advisory firm. 

“The economic vitality and growth of our region’s economy is inextricably tied to the energy industry,” Tudor said, adding that the Partnership and its members “should use our convening power to rally our companies, political leaders and fellow citizens to position Houston as the city that will lead this energy transition.”

The Partnership will launch a new initiative aimed at accelerating Houston’s activity around energy transition, while existing committees will continue efforts to bring energy tech and renewable energy companies to Houston; explore the policy dimensions of carbon capture, use, and storage; and advocate for legislation that helps ensure the Texas Gulf Coast is positioned as a leader in that technology. 

Houston business leaders have a responsibility to lead the transition to a cleaner, more efficient and more sustainable, lower carbon world, Tudor said. “We need to be the driver, not the passenger.” 

Highlighting some of the changes and milestones reached in Houston over the last decade*, Partnership President and CEO Bob Harvey said that while the last 10 years were transformational for Houston, the next decade may be to be even more critical to the region’s long-term success. “I believe the decisions we make and the work we do together in the next few years will determine the trajectory of Houston for the next several decades and beyond,” Harvey said. 

2019 Key Accomplishments 

The Partnership’s 2019 Board Chair, Scott McClelland, said he was pleased with the organization’s successful efforts on major initiatives last year. Through its public policy committees, the Partnership influenced key bills during the 86th Texas Legislative Session, including House Bill 3 that brought $5 billion in new state funding into the public education system and Senate Bill 7 that resulted in $2 billion in state funding for statewide recovery and future flood mitigation. 

“If there’s one big thing I learned over the last year, it’s that the key to making this city better for everyone is having a lot of Houstonians involved in the effort,” said McClelland, president of H-E-B. “There’s power in numbers. It’s a force multiplier.” 

Harvey also pointed to Houston’s recent success in bolstering its innovation ecosystem—a move critical to the region’s ability to compete with other global cities. Last summer, Rice University broke ground on The Ion, a 270,000-square-foot innovation center that will anchor the broader 16-acre South Main Innovation District. Other startup incubators and accelerators have opened their doors throughout the city in recent months, including MassChallenge, The Cannon, Gener8tor, Plug and Play and more. The Partnership also played a role in fintech company Bill.com opening its first office outside of Silicon Valley here in Houston in September. 

In January 2019, the Partnership launched a new strategic initiative, Houston Next, and a complementary $50 million capital campaign to support the effort. Designed to advance Houston’s position as a great global city, the plan focuses on three core areas: creating a strong, diverse 21st-century economy, ensuring a great quality of life and supporting opportunity for all. Houston Next aims to empower local business leaders to accelerate the region’s progress at the intersection of those three areas of impact and ensure Houston’s continued success. Harvey said the Partnership is well underway toward meeting its Houston Next objectives and reported that the campaign has raised $25 million, half of its goal. 

See the Partnership’s full 2019 Annual Report for additional facts and figures.

*The last decade was one of the most transformative in Houston’s history. Consider: 

•    The region added more than 1.1 million residents over the last 10 years an increase of more than 18 percent. 
•    Houston became the most diverse city in the nation, now led by its Hispanic population and the fastest growing Asian population in America. 
•    The Houston region added $64 billion to its GDP, a 17 percent increase in real terms. 
•    Foreign trade expanded by nearly $24 billion, making Houston the most trade focused metropolitan area in the nation. 
•    Houston added 615,000 net new jobs over the last decade. 

###

Greater Houston Partnership 
The Greater Houston Partnership works to make Houston one of the best places to live, work and build a business. As the economic development organization for the Houston region, the Partnership champions growth across 11 counties by bringing together business and civic-minded leaders who are dedicated to the area’s long-term success. Representing 1,100 member organizations and approximately one-fifth of the region’s workforce, the Partnership is the place business leaders come together to make an impact. Learn more at Houston.org.

CONTACT:    
    Maggie Martin 
    Senior Manager, Marketing & Communications 
    (o) 713-844-3640 mmartin@houston.org 

    A.J. Mistretta
    Vice President, Communications         
    (o) 713-844-3664 (c) 504-450-3516 | amistretta@houston.org     
 

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Houston is likely to see significant job losses and a prolonged drain on its economy from the COVID-19 coronavirus.   That was one of the major takeaways from a virtual presentation by Patrick Jankowski, Partnership Senior Vice President of Research, on March 31. Jankowski discussed his latest analysis of COVID-19, collapsing oil prices, the imminent U.S. recession, and their impact on Houston’s economy.  Jankowski stressed that because of the unprecedented and ongoing nature of the situation, predicting the economic impact is difficult at this time. “With the situation changing daily, we can’t really get a good read on what’s actually going on yet,” he said.  Jankowski referenced the next Bureau of Labor Statistics’ jobs report, which will be based on the number of employees on payroll during the second week of March and won’t include the waves of layoffs that happened during the third and fourth weeks of March. It won’t be until the April report is released in early May when we will see the real impact on the job market. Pandemic will determine recession’s length and severity  “We are coming off a period of 113 consecutive months of job growth, the longest expansion in US history and a phenomenal jobs report,” Jankowski said. “Last week we saw 3.3 million claims for unemployment benefits, and I believe that number will only rise as more people are laid off, the system becomes less overloaded and people figure out how to apply for benefits.”  Given the single week of job losses based on the initial claims for unemployment insurance in Texas and Houston’s share of Texas’ jobs, Jankowski estimates mid-March losses in the region will be around 37,945 jobs.  Jankowski noted that measures to combat the coronavirus are also combating the economy. He referenced the U.S. GDP forecasts from major financial institutions that estimate a decline in GDP for the first quarter of the year that continues through the rest of the year.   “From my perspective - yes, we are in a recession and the situation will worsen in Q2,” Jankowski said. “We hope to have some growth in Q3, but we will end of the year worse off than at the beginning.”  Add that to the drop in oil prices and the Texas Railroad Commission being asked to regulate crude oil production for this first time since the 1970s, Jankowski believes the crude collapse will only add to Houston’s misery.  Small businesses and other industries hurt the worst  Jankowski mentioned the Partnership’s survey of its small business members and found that 29% were unable to deliver goods or services, 59% are operating below half capacity and the most concerning, that 41% can survive only 1 to 4 weeks.  He also highlighted industry sectors that are most at risk during this initial period and the 777,000 jobs tied to those sectors. The sectors include those impacted by social distancing (like retail), those whose services can’t be delivered remotely (such as plumbers and other home services), those that aren’t considered essential (such as the arts), and most small businesses (that tend to operate on thin margins).   “If this virus continues after May, every job is at risk, every sector is at risk,” Jankowski stressed.  “And even if you are working from home and able to provide services to some degree, you may be affected. We will see additional layoffs to what we’ve already experienced.”  Houston predicted to lose at least 150,000 jobs  There are two ways to predict how Houston will fare – looking at models based on assumption or based on history.   The Institute for Regional Forecasting shows 18 different scenarios of how the virus and oil prices will play out, with the most likely scenario from their prediction showing Houston down by 44,000 jobs. On the other hand, The Perryman Group’s model is forecasting 256,000 jobs lost.   “These are two very different forecasts and you’re really seeing that uncertainty play out in these models,” Jankowski said.   By referencing the history of recessions Houston has experienced, Jankowski estimates Houston’s jobs loss will hover between 150,000 jobs and 350,000 jobs.   “Given how Houston fairs when oil is faring badly and then when the US economy not doing well, we are likely to look like between 2008-09 recession and oil bust we had in the 1980s,” Jankowski said.   With a job loss of 13.2% from 1982, that amounts to about 417,450 jobs today. Using the Great Recession benchmark of 4.5%, that loss is closer to 142,325 jobs.  Collapsing oil prices on par with 1982 energy bust  With the tensions between Saudi Arabia and Russia spilling onto the world stage and affecting the price of crude, Houston has already felt the effects.   On March 30 of this year, the price of oil closed at $21.07 a barrel. During that same month in 1982, the price was $10.25 but adjusted for inflation, it closed at $24.37 a barrel.   “We can expect crude to slowly climb back into the low $30s by mid-summer without a Russia-Saudi deal,” Jankowski said. “We’ll see any jobs we regained from the 2014 fracking bust disappear and a leaner, smaller industry in the next two years with more consolidations and bankruptcies taking place.”  Houston in one word – resilient  One of the biggest determining factors in an economic rebound will be the level of fear people still have around the virus, Jankowski said. Even on the downward slope people will practice at least a degree of social distancing. He reiterated the damaging shock to consumer confidence the virus has caused.   “The economy really won’t be able to recover until people feel comfortable spending again. However, if there’s one word I would use to describe Houston, it would be resilient,” Jankowski said. “We've been through five downturns since the 1980s and yet the economy is larger now and more diverse than ever before.” 
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