The South/economy & Business: The Nonstop Texas Gusher

The outsider pictures the Texas economy as a montage of oil wells gushing instant wealth, horizon-to-horizon cattle roaming the King Ranch, self-made millionaires stomping about in stetsons, ready to take a shot at anything that promises a profit. The surprising fact is that so much of this view is essentially true—although the real business mosaic of Texas is of course vastly more complicated. The Texas economy is a thing unto itself, almost self-sustaining, ever on the move. Today, for example, Texas is expanding production of drilling equipment faster than output of oil itself. Besides its oil tycoons and cattle barons, the overnight millionaires now include such men as Jerry Argovitz, who started as a dentist, offered investment and financial advice to doctors and professionals, and made enough money to retire from dentistry three years ago at age 35.

The economy of Texas began distinguishing itself from the rest of the South at 10:30 a.m. Jan. 10, 1901. That was when oil was struck at Spindletop, near Beaumont. The find launched Texas into a growth era that has never really ebbed. This year Texas is expected to produce $81 billion worth of goods and services, greater than the entire national output of Australia.

Thanks mostly to oil, Texas was the state where the 1974-75 recession never happened. Though production of oil and gas from the state’s 200,000 wells is tapering off, prices have risen so dramatically that the lower volumes produce far higher revenues. Texas actually increased its manufacturing work force, as factories turned out drilling equipment and supplies to assist the worldwide search for oil. The state’s unemployment rate is now less than 6%, v almost 8% for the U.S. And Texas’ industrial capacity is growing fast. Three major refineries and a score of chemical plants were built last year; a fourth refinery and five more chemical factories are going up now.

Nonfarm income in Texas is about 13 times greater than farm income, but agriculture plays an important role for the state’s 12.2 million people, who are spread over 171 million acres. Besides leading in cattle production, Texas outpaces all other states in lambs, goats, grain sorghum, cotton, watermelons, cabbage and spinach. It also vies with Louisiana as the biggest U.S. rice grower.

Texas’ economic bustle has paid off where it counts most—in paychecks. Per capita personal income grew 10.3% last year, to $5,631. That was $647 above the Southern average, though still $271 below the national figure. But Texans contend that their dollars go further. They do not pay a state income tax, and housing costs are low.

Not all of Texas is booming. One example: employment at the Lyndon B. Johnson Space Center near Houston is down to 3,722 from its 1967 peak of 5,064. But the old Texas exuberance is as bubbly as ever. Says Houston Developer Gerald Hines, 51, who came to Texas from Gary, Ind., in 1948 and has built projects valued at half a billion dollars: “I think I could have made it in the North, but what might take a person with the right ideas 30 years to do up there, he might do in ten years here.”