As natural gas is playing a smaller role in the Texas power generation market from 2005 through 2011, the state lost $7.7 billion and forfeited 8,600 jobs, according to a study by Dr. Michael J. Economides, a chemical and biomolecular professor at the University of Houston, and Philip E. Lewis, a petroleum engineering consultant.
The study analyzes direct and value-added economic effects coal, natural gas and wind, which are the three dominant power generation energy sources in Texas. For the past two decades in the U.S., natural gas has become a growing energy source for power generation, but starting in 2005 Texas reduced its reliance on natural gas while national use rose.
Considering that nearly all of the natural gas used for electric generation in Texas is produced in-state, this $7.7 billion reduction includes $2.5 billion in lost potential revenue, including leasehold improvements, production royalties, severance taxes to state and local governments, sales taxes and local property taxes, and $530 million in lost wages in 2011.
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"Over this study period, Texas increased its reliance on out-of-state coal as a substitute for Texas natural gas," Economides says. "This does little for our economic development and job creation. Greater use of Texas natural gas will aid the state's employment, which has suffered as a result of this trend."
The research also finds that Texas natural gas companies pay five times more in state and local taxes as well as royalties on a per-job basis in comparison to the average company in other industries. Community hospitals, emergency services and independent school districts in Texas are all consumers of natural gas with about 75 percent of the total independent school districts in Texas each receiving an average of $1.35 million per year in ad valorem revenues.
"A failure to take full advantage of Texas natural gas in power generation is a substantial missed opportunity for our state because of how tightly integrated natural gas development and related industries are with the state's economy," Economides says. "Texans ignore the benefits of this abundant local resource at their economic and environmental peril. Embracing greater use of natural gas is key to Texas' long-term growth, prosperity and clean air."
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