Bloomberg Businessweek - USA (2020-05-18)

5 P O L I T I C S

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Edited by

Amanda Kolson Hurley

● Thecollapsein oilpricesand

Texas’paincouldreshapethe

electoralmapin November

Gasolinepricesoflessthan$2a gallonoughtto

begoodnewsfora U.S.presidentwithaneyeon

reelection:It’sa truismthatAmericanvotersare

hypersensitivetothepriceofgasandfactorit into

theirdecisionsinthevotingbooth.Butwiththe

U.S.nowtheworld’stopenergyproducer,rock-

bottomoilpricesareinflictingmajoreconomic

damageandposea problemforDonaldTrump.

Fallingpricescausedby shutdownsrelated

toCovid-19—andSaudiArabiaandRussiaflood-

ingthemarketina pricewar—haveleddrillersto

closedownhalfofallU.S.oilrigs.TheU.S.oiland

gasindustrylost51,000drillingandrefiningposi-

tionsinMarchalone,accordingtoBWResearch

Partnership,a consultingfirm.

Theindustry’swoeswillexacerbatethenation’s

widereconomicmiseryandstandtoinfluencethe

outcomeofthepresidentialrace.Intherunupto

November,thetwinshocksofCovid-19andtheoil

pricecollapsearejeopardizingTrump’sstandingin

RepublicanTexas,thesecond-biggestprizeonthe

electoralmap.Yetthesameenergydynamicsdrag-

gingdowntheeconomyinTexascouldgiveTrump

a boostinPennsylvania—acriticalswingstatehe

barelywonin2016—becausedecreasedoilproduc-

tionpotentiallymeanshigherpricesandmorejobs

forthestate’sfracking-fuelednaturalgasindustry.

Texas,the epicenterofAmerica’s oilandgas

industry, has borne the brunt of the price crash.

Because of the coronavirus crisis and the oil bust,

the state “is suffering a double black-swan event,”

says Mark Zandi, chief economist for Moody’s

Analytics, using a term that describes rare occur-

rences with extreme detrimental impact.

In February, Texas ranked 30th in the country

with its unemployment rate of 3.5%; by March, it

was up to 15th at a rate of 4.7%. April numbers will

likely send it higher.

Last month was among the most brutal in years

for oilfield job cuts. Frack workers have been losing

jobs the fastest in the Permian Basin of West Texas,

the world’s largest shale oil field. But the pain has

reached office workers, too. Halliburton Co. said

on May 6 it was laying off roughly 1,000 employees

from its Houston headquarters.

In a recent survey of energy workers (mostly

in office jobs) conducted by the University of

Houston, fewer than half were optimistic about

the industry’s long-term outlook. An additional 38%

said they weren’t optimistic at all. That surprised

Christiane Spitzmueller, a professor of industrial

organizational psychology at the university who’s

been studying the oil workforce for years. “That’s

pretty shattering if they don’t see a very optimis-

tic future,” she says. “Generally, the people who’ve

been in this industry are big fans of the industry

and pretty firmly believe in the contributions the

industry makes for society as a whole.”

Republicans have won every presidential race in

Texas since 1980. But changing demographics and

the economic downturn have introduced hints of

purple, and Democrats are in their best position

there in four decades. Democrat Beto O’Rourke

came within three points of defeating Republican

Senator Ted Cruz in 2018, while Democrats picked

up two House seats in the Dallas and Houston sub-

urbs. A recent statewide Dallas Morning News ILUUSTRATION BY WOSHIBAI

Bloomberg Businessweek May 18, 2020