Skip to main content

Bayou Business Download: 2020 Economic Outlook with Patrick Jankowski

Published Jan 21, 2020 by A.J. Mistretta


Bayou Business Download 1

Bayou Business Download is a podcast from the Greater Houston Partnership that dives into the data and analytics influencing the region’s economy and the core business sectors that drive Houston’s growth. 

On this edition of Bayou Business Download, we chat with Partnership Senior Vice President of Research Patrick Jankowski  about the state of Houston’s economy going into 2020. What’s happened in the last year and what does that suggest about where we’re going in the months ahead? 

Here are 5 key takeaways from Jankowski: 

  • Those parts of the Houston economy tied to the broader U.S. economy are doing well. We’re seeing U.S. GDP growth of 2.1%. Industrial production was growing in November and the national unemployment rate is at an all-time low. Additionally, those parts of our economy tied to the global economy are also doing quite well. Though trade is flat in the region, it’s flat in the middle of an ongoing trade war with China and a decline in trade with Mexico. So, we’re maintaining. But where we’re seeing a struggle is on the energy side where we’re not seeing growth in revenues or employment. That decline is being driven by the capital markets; Wall Street is less willing to lend money for exploration programs than it was this time last year. 
     
  • Houston is in no danger of entering a recession in 2020 or 2021. But we are going to see slower growth because the energy industry is becoming a drag on the economy. There are certain parts of Houston’s economy that will do quite well in 2020, strong growth in housing and apartment construction for instance. But we won’t see significant growth in manufacturing and the consumer side of things is a mixed bag. 
     
  • We expect job growth of 42,300 jobs in the region. That’s lower than the long-term average, and again that’s due to the drag of the energy sector. But still if we add 42,000 or 43,000 jobs in the next year, that’s decent growth. (See Employment Forecast
     
  • One of the big concerns about a slowing China is that that’s where much of the growth in the world economy has been focused. If we see the Chinese economy continue to slow, that’s going to start affecting demand for the things Houston produces, from oilfield equipment and services to the petroleum products themselves. That said, what we’re hoping to see is an increase in growth from India which could help offset the slowing growth in China. 
     
  • The world consumes about 100 million barrels of oil a day. Even with the slowing demand for crude, we’re going to need to supply at least 100 million barrels of oil a day for the next 10 to 20 years. So while we have an energy transition to manage, that transition won’t occur quite as rapidly as people might think. 

Listen to this and future episodes of the Bayou Business Download podcast here. Get updates on key economic indicators and other data and analysis from the Partnership Research team here
 

Related News

Economic Development

Geothermal Startup Sage Geosystems Highlights Potential for New Energy in Houston

11/12/24
Long known as the energy capital of the world, Houston is proving its merit as the industry embraces an all-inclusive approach to energy sources. Beyond the wealth of oil and gas capital, Houston has become a landing spot for numerous solar, wind and battery storage investments. Companies like Fluence Energy, Renewable Parts and Solar Plus have chosen Houston for its manufacturing of innovative energy products. Geothermal Energy: An Untapped Resource Geothermal energy, often unsung in the new energy landscape, can be found beneath our feet, harnessing the power of heat lying underground. In conventional geothermal power plants, wells are drilled into geothermal reservoirs to access hot water or steam, which is then brought to the surface. This steam is used to drive turbines that generate electricity. Sage Geosystems is changing that by pursuing geothermal potential in rock that is hot but doesn't have the large volumes of water to bring the heat to the surface. Hot, dry rock enables geothermal power generation in many more places as the geology is more prevalent which enables geothermal to now be deployable almost anywhere in the world. Sage Geosystems: Leading Geothermal Innovation Houston is seeing its chance to make a mark with geothermal thanks to companies like Sage Geosystems, founded in 2020 with its headquarters near Bush Intercontinental Airport. Sage works to build the technology that makes this renewable energy a greater force in the worldwide energy transition, engaged in contracts and partnerships with local energy providers, major government agencies like the U.S. Department of Defense (DOD) and hyper-scalers like Meta Platforms. On the public utility side, the company recently partnered with the San Miguel Electric Cooperative to build the first geopressured geothermal system. The technology used can be paired with solar and/or wind to convert these intermittent clean energy sources to 24-hour power generation, or it can be used to move these clean energy sources from a time of day when the demand is low to a time of day when the demand is high, stabilizing the utility grid and helping mitigate the issue of blackouts and brownouts. The facility will be commissioned in December. Sage has three ongoing projects with the DOD. The U.S. Air Force recently provided Sage with $1.9 million in Tactical Funding Increase (TACFI) funding to perform a geothermal demonstration with electricity generation, which will take place in Sage's test well in Starr County, Texas with a targeted completion date of Q3/Q4 2025.  The Defense Innovation Unit (DIU) has funded two geothermal feasibility studies for the U.S. Army installation of Fort Bliss in El Paso and the Naval Air Station CC in Corpus Christi. Sage is performing these feasibility studies with the University of Texas Bureau of Economic Geology. The intent of these studies is to evaluate the technical and economic feasibility of geothermal system installations using Sage's Geopressured Geothermal System (GGS) technology at these two DOD installations. Collaboration Powers Innovation in Houston As evidenced by the above, collaboration plays a central role in the growth of Sage Geosystems. The company has not only partnered with utility companies and major governmental institutions, but also collaborated with the Rice Alliance for Technology and the Greater Houston Partnership to facilitate work with institutions of higher learning like the University of Houston and Rice, venture capital firms, and established energy corporations such as ABB, Chesapeake (now Expand Energy), Nabors, and Geolog. This sense of collaboration is one of the many reasons Sage Geosystems has thrived in Houston, along with the infrastructure, talent and innovative spirit that propels local companies to success. The Houston Advantage for Energy Startups “While Texas is the top energy state in the U.S., Houston is the heart. Houston provides not only access to the O&G industry, but also many utilities and others interested and/or working in energy...The Houston energy ecosystem and the benefits described above will continue to be critical in this scale-up plan." - Sage Geosystems CEO Cindy Taff Looking ahead, Sage is building its first commercial energy storage facility and will be performing a geothermal power generation demonstration with the U.S. Air Force in 2025.  Sage sees Houston as the best place to scale in Texas and throughout the world. "Geothermal energy represents a transformative opportunity for Houston as it further strengthens our position as the global energy capital. Sage Geosystems' innovative approach to harnessing geothermal resources exemplifies the spirit of collaboration, innovation, and commitment to sustainability that defines our region’s energy leadership.” - Partnership Senior Vice President of Economic Development Craig Rhodes  For any new energy startups looking to establish themselves, Taff recommends leveraging Houston’s many assets for future success. “Tap into existing knowledge that can be transferred to clean tech and partner with companies that know where to find the skills needed to give your startup a leg up,” Taff said. “Join local incubators like Rice Alliance for Technology and the Houston Technology Center and others, leverage Greater Houston Partnership and Greentown Labs for networking, collaborate with Rice University and University of Houston, and take advantage of Texas' business-friendly regulatory environment.” Sage Geosystems is a prime example of how energy startups use Houston’s assets as a springboard to meet their potential, along with renowned innovators such as Syzygy Plasmonics, Cemvita Factory, and Fervo Energy. Learn more about the business opportunities within Houston's energy industry and its all-inclusive energy ecosystem.   
Read More
Economic Development

Greater Houston Partnership & Center for Houston’s Future Lead Mission to Japan & Korea to Strengthen Global Clean Hydrogen Partnerships

11/8/24
The Greater Houston Partnership and the Center for Houston’s Future (CHF) recently led a delegation of clean hydrogen sector leaders to Japan and South Korea. This mission aimed to advance collaboration and strengthen ties within the rapidly expanding global clean hydrogen ecosystem, marking a significant step in Houston's leadership in the energy transition.  During the visit, Brett Perlman, Managing Director of CHF, signed a Memorandum of Understanding (MOU) with the leader of the Japanese Hydrogen Association, setting the stage for strategic collaborations that will boost clean hydrogen production both in East Asia and along the U.S. Gulf Coast.  Key moments of the mission included the Japan – U.S. Gulf Coast Clean Hydrogen Roundtable, where Perlman and Partnership Vice President of International Investment and Trade John Cypher shared insights into Houston’s hydrogen leadership.  Delegation members had the opportunity to tour cutting-edge hydrogen facilities across Japan and South Korea, including Chiyoda’s Liquid Organic Hydrogen Carrier (LOHC) production plant, Hanwha Daesan’s green energy fuel cell facility, Hyundai HyNet’s steel hydrogen shipment center, the SK Hydrogen Liquefaction Plant, and Bloom Energy’s fuel cell production facility. The group also met with high-level government officials from Yokohama, Kawasaki City, and Tokyo to discuss future collaborations.  The delegation also participated in H2 Week 2024 in Seoul, Korea, one of the world’s premier hydrogen conferences, where they connected with South Korean government officials, energy leaders and industry innovators.   “Strategic partnerships with key international allies are amplified by these missions and crucial for unlocking the full potential of emerging industries like clean hydrogen. At a time where energy and energy security are paramount, these missions not only reinforce Houston’s position as the global energy capital but also foster prosperity in the region. Together, we’re forging innovative solutions the world urgently needs in today’s energy landscape,” said John Cypher, Partnership Vice President of International Investment and Trade.  Houston’s Gulf Coast region was recently designated as one of the nation’s seven hydrogen hubs by the U.S. Department of Energy and is poised to play a pivotal role in this emerging sector. The Gulf Coast already accounts for more than a third of U.S. hydrogen production and is equipped with over 1,000 miles of hydrogen pipelines spanning 48 production facilities. In addition, the HyVelocity Hydrogen Hub, led by a coalition of seven core industry partners with support from academic and other organizations like CHF, is set to receive up to $1.2 billion in funding from the Bipartisan Infrastructure Law.  The growth of the clean hydrogen sector in the Houston region is expected to create up to 45,000 direct jobs, 35,000 construction jobs, and 10,000 permanent positions. International collaborations with partners like Japan and Korea, Houston’s fourth and seventh largest trading partners, will be essential for sustaining and accelerating this growth.  Learn more about Houston's hydrogen ecosystem.
Read More

Related Events

Economic Development

Houston Region Economic Outlook

Tickets now on sale! Featuring economists and industry leaders, the Houston Region Economic Outlook takes a close look at the core industries driving job growth and economic indicators measuring the…

Learn More
Learn More
Executive Partners