We recently noted that falling oil prices will probably not have a huge impact on job growth nationwide.
But there are parts of the country where the oil industry is critical for employment.
To get an idea of what areas will be most affected by a drop in oil prices, Trulia chief economist Jed Kolko posted this map showing where oil and gas industry jobs are most concentrated, based on the Census Bureau’s 2012 County Business Patterns program. This includes both regions traditionally big in oil production, like the Gulf Coast and Alaska, and places like North Dakota and Pennsylvania that have been the beneficiaries of the shale-oil boom:
In the post, Kolko focused on how oil prices were likely to affect housing markets around the country. Kolko and his team analysed historical trends in oil and housing prices from 1980 until the present and found two big results:
“1. In oil-producing markets, home prices tend to follow oil prices, but with a lag. For instance, in the 1980s, the largest year-over-year oil price declines were in early- and mid-1986. In Houston, job losses were steepest in late 1986. But home prices didn’t slide most until the third quarter of 1987. Since 1980, employment in oil-producing markets has followed oil-price movements roughly two quarters later and home prices have followed oil-price movements roughly two years later.
2. While home prices and oil prices move in the same direction in oil-producing markets, they tend to move in the opposite direction in many other markets. Cheaper oil lowers the costs of driving, heating a home, and other activities, boosting local economies outside oil-producing regions. In the Northeast and Midwest especially, home prices tend to rise after oil prices fall. The specific markets where home prices get the biggest jolt depend on which years we analyse.”
If the present oil shock continues, we might see economic pain followed by a drop in housing prices in oil-producing areas, while the reduced cost of living in oil-consuming areas could give a nice economic and housing market bump.
For more, check out Kolko’s post on Trulia here.