Will Houston become obsolete soon? Forum

[Anonymous User]

With a lot of the corporate market being focused around energy, and the slow adaptation by Big Oil to a larger ESG focus, will Houston begin to crumble as the major market in the South? As a Dallas native, it’s always seemed that any in state legal talent should go to Houston before lateraling back to your home city but the market there doesn’t seem very stable for the long term.

[Ultramar vistas]

With a lot of the corporate market being focused around energy, and the slow adaptation by Big Oil to a larger ESG focus, will Houston begin to crumble as the major market in the South? As a Dallas native, it’s always seemed that any in state legal talent should go to Houston before lateraling back to your home city but the market there doesn’t seem very stable for the long term.

No.

[nealric]

With a lot of the corporate market being focused around energy, and the slow adaptation by Big Oil to a larger ESG focus, will Houston begin to crumble as the major market in the South? As a Dallas native, it’s always seemed that any in state legal talent should go to Houston before lateraling back to your home city but the market there doesn’t seem very stable for the long term.

No.

To elaborate on the answer:

While the death of oil has ben greatly exaggerated, there's a lot more to Houston than oil (and a lot more to energy than oil). Regardless of whether big oil has an ESG focus, the world economy is going to demand copious amounts of energy from whatever source derived. Houston has established itself as a global energy hub, and I doubt that will change with increased ESG imperatives.

That said, if you could perfectly predict the economic trajectory of any given city, you wouldn't need law to make your fortune.

[Anonymous User]

I think it will definitely lose some of its value, especially coupled with climate change. Seems like every month there's some storm or something causing a power outage. The city is getting hit so hard by it and I don't see it getting better. Every year there is now a "once in a lifetime" weather event.

[Ultramar vistas]

I think it will definitely lose some of its value, especially coupled with climate change. Seems like every month there's some storm or something causing a power outage. The city is getting hit so hard by it and I don't see it getting better. Every year there is now a "once in a lifetime" weather event.

Tell me you don’t live in Houston without saying “I don’t live in Houston”.

But seriously, as much as you may want Houston to decline (idk why you are invested in wishing this, seems odd) the city is, despite Harvey etc., and continues to be, on the rise economically and in terms of population. Oil and Gas has always been boom and bust but lately the city seems much less affected by its ups and downs, which suggests to me that the diversification the city’s leadership has always talked about is really coming true. The Med Center is a powerhouse, Oil and Gas companies are becoming Energy companies but remaining in Houston, the port remains as important as ever, and petrochemicals and refineries will be critical for as long as the world needs plastics.

Generally, folks seem to have a preference for moving to sunny, cheap, low income tax places, and Houston - while brutally hot for 4 months in summer - has a very nice climate October thru May, and that seems to appeal.

We could talk about wildfires and earthquakes in Cali, terrible cold in Chicago, rent in NY and SF, but frankly every city has always had its downsides, and there is no perfect location. What happened to Detroit shows no signs of reproduction outside the rust belt, so feel free to bet against Houston or start threads asking questions that are plainly not questions, but statements of your own opinion, but I don’t think it’s going anywhere. Sorry.

[nixy]

Yeah, the idea of Houston being in a decline because oil/gas (or climate change) just doesn’t make any sense to me.

[feminist.supporter]

Judge Marvin Isgur and David Jones would like to have a word with you.

[Anonymous User]

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

[nixy]

I’m really curious if these anons are all the same person or not.

Anyway, Detroit also had to deal with the impact of the Great Migration and white flight. I still don’t think Houston in 2021 is similarly situated to Detroit in 1960 (or whatever point after that you pinpoint the beginning of Detroit’s decline).

[nealric]

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

I think you are confusing the political stances of the state government with the attitude of the business community and the reality on the ground. You may hear a bunch of anti-renewable rhetoric from the state government, but Texas produces significantly more renewable energy than any other state. It's also still rapidly growing. The physical features of the state (hot/sunny with lots of open plains) lend it to large wind and solar installations. While those projects may be physically distant from Houston itself, the projects are being run out of Houston.

Plus, what gets lumped in with the energy industry also includes petrochemicals, for which there is no replacement on the immediate horizon. The city's dependence on oil and gas was already tested by the 2014/15 crash. A lot of folks were predicting late 80s malaise, when a crash of similar magnitude caused a long-term recession in the city. That recession didn't come because the city was far more diversified.

Besides that, the dynamics at play are very different from what happened to Detroit. We don't have a situation where the city is being hollowed out by flight to the suburbs, nor are there any dynamics in play to suggest it would.

[Anonymous User]

I’m really curious if these anons are all the same person or not.

Anyway, Detroit also had to deal with the impact of the Great Migration and white flight. I still don’t think Houston in 2021 is similarly situated to Detroit in 1960 (or whatever point after that you pinpoint the beginning of Detroit’s decline).

Their whole analysis is "oil and gas go down, Houston doomed???" Houston in 2021 and Detroit in the 1960s are not even kind of similar outside of being in the same country. Houston becoming "obsolete" in any time frame that is within the lifespan of most of the posters on this board is incredibly unlikely.

[nealric]

I’m really curious if these anons are all the same person or not.

Anyway, Detroit also had to deal with the impact of the Great Migration and white flight. I still don’t think Houston in 2021 is similarly situated to Detroit in 1960 (or whatever point after that you pinpoint the beginning of Detroit’s decline).

The anons are not the same username, but this really isn't an appropriate use of the anon feature. Future anons on this thread will be outed unless they are offering personal information.

[legalpotato]

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

Some very weird ideas here.

1) yes ppl are looking for alternatives to O&G, but even assuming there is a true, viable replacement for petroleum, coal stopped being the dominate energy source 70 yrs ago and there is still a big industry for it. All that is to say, even after a true replacement energy source (or sources) is found, O&G will still have a long runway until it is truly phased out.

2) well there is a big difference between manufacturing in detroit and O&G in houston/texas that makes for a terrible comparison, don't want to rob you of the opportunity to figure it out for yourself though.....

Whether or not O&G is on its way out (don't think we are even at a place where we can say it is), Houston is the O&G capital of america and will remain so until O&G is not a thing anymore. Houston is not going anywhere during our lifetimes.

[Anonymous User]

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

I think you are confusing the political stances of the state government with the attitude of the business community and the reality on the ground. You may hear a bunch of anti-renewable rhetoric from the state government, but Texas produces significantly more renewable energy than any other state. It's also still rapidly growing. The physical features of the state (hot/sunny with lots of open plains) lend it to large wind and solar installations. While those projects may be physically distant from Houston itself, the projects are being run out of Houston.

Plus, what gets lumped in with the energy industry also includes petrochemicals, for which there is no replacement on the immediate horizon. The city's dependence on oil and gas was already tested by the 2014/15 crash. A lot of folks were predicting late 80s malaise, when a crash of similar magnitude caused a long-term recession in the city. That recession didn't come because the city was far more diversified.

Besides that, the dynamics at play are very different from what happened to Detroit. We don't have a situation where the city is being hollowed out by flight to the suburbs, nor are there any dynamics in play to suggest it would.

I've shifted to litigation and will be starting as a midlevel in a Houston boutique after my clerkships. But, once upon a time, as a junior transactional associate in NYC, I found that many of our "big" project finance deals were run out of Houston with connections to Mexico City. These deals would include those multi-year billion dollar financings encompassing banks and companies in the US and Latin America. It may just be a function of my previous firm handling Latin American business in Houston (as opposed to, I don't know, the LA office), but it seemed to me then that Houston---or more specifically, the transactional work in Houston---was more than just the O&G industry based in the city.

[Anonymous User]

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

Some very weird ideas here.

1) yes ppl are looking for alternatives to O&G, but even assuming there is a true, viable replacement for petroleum, coal stopped being the dominate energy source 70 yrs ago and there is still a big industry for it. All that is to say, even after a true replacement energy source (or sources) is found, O&G will still have a long runway until it is truly phased out.

2) well there is a big difference between manufacturing in detroit and O&G in houston/texas that makes for a terrible comparison, don't want to rob you of the opportunity to figure it out for yourself though.....

Whether or not O&G is on its way out (don't think we are even at a place where we can say it is), Houston is the O&G capital of america and will remain so until O&G is not a thing anymore. Houston is not going anywhere during our lifetimes.

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

Some very weird ideas here.

1) yes ppl are looking for alternatives to O&G, but even assuming there is a true, viable replacement for petroleum, coal stopped being the dominate energy source 70 yrs ago and there is still a big industry for it. All that is to say, even after a true replacement energy source (or sources) is found, O&G will still have a long runway until it is truly phased out.

2) well there is a big difference between manufacturing in detroit and O&G in houston/texas that makes for a terrible comparison, don't want to rob you of the opportunity to figure it out for yourself though.....

Whether or not O&G is on its way out (don't think we are even at a place where we can say it is), Houston is the O&G capital of america and will remain so until O&G is not a thing anymore. Houston is not going anywhere during our lifetimes.

(Anon because I am disclosing I lived in Houston, worked in oil and gas, and my school and year are easily identifiable from post history and it would be very easy to out me, so please dont unanon me).

Coal is kind of a weird comparison if you are trying to say "no Houston is fine, just look at coal." Have you been to W Va?

I love Houston. But I lived in Houston through several oil and gas busts, including what was probably the last *sustained* bust in mid 2010's. O&G doesnt have to dissappear for Houston to hurt. It just has to go down for a sustained period of time, and then people get laid off, house values fall, people get spooked, restaurants get empty, people stop buying cars, companies start pinching pennies (which means cutting cost centers, and taking second looks at legal budgets), etc. Cities rely on growth to pay bonds, pensions, etc. and if there's any kind of sustained downturn it gets accelerated, quickly. WHen you live in Houston during a bust, all this is pretty evident and people are really on edge. Yes, Houston is more than O&G, and O&G is not doing to dissappear, but it doesnt have to dissappear (or even get close to it) for Houston to face a pretty uncomfortable reckoning.

[nealric]

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

Some very weird ideas here.

1) yes ppl are looking for alternatives to O&G, but even assuming there is a true, viable replacement for petroleum, coal stopped being the dominate energy source 70 yrs ago and there is still a big industry for it. All that is to say, even after a true replacement energy source (or sources) is found, O&G will still have a long runway until it is truly phased out.

2) well there is a big difference between manufacturing in detroit and O&G in houston/texas that makes for a terrible comparison, don't want to rob you of the opportunity to figure it out for yourself though.....

Whether or not O&G is on its way out (don't think we are even at a place where we can say it is), Houston is the O&G capital of america and will remain so until O&G is not a thing anymore. Houston is not going anywhere during our lifetimes.

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

Some very weird ideas here.

1) yes ppl are looking for alternatives to O&G, but even assuming there is a true, viable replacement for petroleum, coal stopped being the dominate energy source 70 yrs ago and there is still a big industry for it. All that is to say, even after a true replacement energy source (or sources) is found, O&G will still have a long runway until it is truly phased out.

2) well there is a big difference between manufacturing in detroit and O&G in houston/texas that makes for a terrible comparison, don't want to rob you of the opportunity to figure it out for yourself though.....

Whether or not O&G is on its way out (don't think we are even at a place where we can say it is), Houston is the O&G capital of america and will remain so until O&G is not a thing anymore. Houston is not going anywhere during our lifetimes.

(Anon because I am disclosing I lived in Houston, worked in oil and gas, and my school and year are easily identifiable from post history and it would be very easy to out me, so please dont unanon me).

Coal is kind of a weird comparison if you are trying to say "no Houston is fine, just look at coal." Have you been to W Va?

I love Houston. But I lived in Houston through several oil and gas busts, including what was probably the last *sustained* bust in mid 2010's. O&G doesnt have to dissappear for Houston to hurt. It just has to go down for a sustained period of time, and then people get laid off, house values fall, people get spooked, restaurants get empty, people stop buying cars, companies start pinching pennies (which means cutting cost centers, and taking second looks at legal budgets), etc. Cities rely on growth to pay bonds, pensions, etc. and if there's any kind of sustained downturn it gets accelerated, quickly. WHen you live in Houston during a bust, all this is pretty evident and people are really on edge. Yes, Houston is more than O&G, and O&G is not doing to dissappear, but it doesnt have to dissappear (or even get close to it) for Houston to face a pretty uncomfortable reckoning.

Obviously, the mid '10s wasn't great, but we didn't really see all those things then. Restaurants weren't empty, people bought cars, and house values didn't fall (though the steep upswing in 12-14 was slowed). The contrast between post '14 oil bust and the 80s oil bust is night and day. I still remember rows and rows of empty strip malls in the early 90s from the 80s bust fall out. Houston has actually grown through the '14/15 bust. I know many people who got laid off from oil and gas post '14 and found jobs in other sectors in a reasonable amount of time.

[legalpotato]

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

Some very weird ideas here.

1) yes ppl are looking for alternatives to O&G, but even assuming there is a true, viable replacement for petroleum, coal stopped being the dominate energy source 70 yrs ago and there is still a big industry for it. All that is to say, even after a true replacement energy source (or sources) is found, O&G will still have a long runway until it is truly phased out.

2) well there is a big difference between manufacturing in detroit and O&G in houston/texas that makes for a terrible comparison, don't want to rob you of the opportunity to figure it out for yourself though.....

Whether or not O&G is on its way out (don't think we are even at a place where we can say it is), Houston is the O&G capital of america and will remain so until O&G is not a thing anymore. Houston is not going anywhere during our lifetimes.

Short term the Houston area is probably fine, but in 10-15 years there will be an economic reckoning and it's hard to see if the area is adapting adequately at this point. Sure, it's built on the energy industry but that's largely O&G and as we've seen, Texas isn't keen on supporting Wind/Solar at the expense of O&G. Much to the contrary comments on this thread, Houston is still heavily dependent on the O&G industry, and if that starts to collapse it'll take a lot of other areas of the economy with it (food service, hospitality, professional services, etc.).

Just look at a place like Detroit circa 1950s-1960s, back then it was the wealthiest city in America on a per-capita basis, and now it is near the bottom, if not at the bottom. Of course the riots were a factor in their fall, but also the one-industry town didn't help. With increased competition and slow action by local industry, the city slowly declined over the next 1/2 century.

Some very weird ideas here.

1) yes ppl are looking for alternatives to O&G, but even assuming there is a true, viable replacement for petroleum, coal stopped being the dominate energy source 70 yrs ago and there is still a big industry for it. All that is to say, even after a true replacement energy source (or sources) is found, O&G will still have a long runway until it is truly phased out.

2) well there is a big difference between manufacturing in detroit and O&G in houston/texas that makes for a terrible comparison, don't want to rob you of the opportunity to figure it out for yourself though.....

Whether or not O&G is on its way out (don't think we are even at a place where we can say it is), Houston is the O&G capital of america and will remain so until O&G is not a thing anymore. Houston is not going anywhere during our lifetimes.

(Anon because I am disclosing I lived in Houston, worked in oil and gas, and my school and year are easily identifiable from post history and it would be very easy to out me, so please dont unanon me).

Coal is kind of a weird comparison if you are trying to say "no Houston is fine, just look at coal." Have you been to W Va?

I love Houston. But I lived in Houston through several oil and gas busts, including what was probably the last *sustained* bust in mid 2010's. O&G doesnt have to dissappear for Houston to hurt. It just has to go down for a sustained period of time, and then people get laid off, house values fall, people get spooked, restaurants get empty, people stop buying cars, companies start pinching pennies (which means cutting cost centers, and taking second looks at legal budgets), etc. Cities rely on growth to pay bonds, pensions, etc. and if there's any kind of sustained downturn it gets accelerated, quickly. WHen you live in Houston during a bust, all this is pretty evident and people are really on edge. Yes, Houston is more than O&G, and O&G is not doing to dissappear, but it doesnt have to dissappear (or even get close to it) for Houston to face a pretty uncomfortable reckoning.

I think you missed the point I was making w/ coal. Petroleum and other energy sources are viable and proven replacements for coal energy. Yet coal energy is still a thing, even 70+ yrs after being replaced. The point was, even after a fully viable replacement is found for petroleum, O&G is still going to be a thing for quite a while (and that is after a replacement is found -- I don't think anyone can say at this point we have found a truly viable replacement, although there are some good candidates)

[BigLawer]

As someone who does a lot of deals in energy and infrastructure, it seems like most of the renewable companies, electric deals, infrastructure deals, etc. are being consolidated in Houston. Having lived in TX for a very long time I used to think the same thing - that Houston would fall as O&G is moved away from. Now I feel like that is very unlikely. I think that "energy" companies are going to stay concentrated in Houston no matter what type of "energy" it is. If you don't think that Exxon, etc. is going to be at the front of the energy race no matter what, you must know something I don't. I think TX as a whole is going to boom for the next 10+ years. Might Austin outpace Houston by percentage? Yes, but Houston's infrastructure is ready for crazy growth, Austin is already struggling. If I were a betting man, I think Houston's growth continues and it becomes the 3rd largest city in no time.

[KirklandSignature]

Agree that Houston isn't going anywhere. Curious what the long-term trajectory looks like for Dallas. Most of the big relocations from California are either going to DFW or Austin.