Feature: Economic diversity key to Houston's recovery from oil slump

Houston, the fourth largest city in the United States, is slowly on the mend from a two-year downturn of oil prices, with the locomotive of diversifying its economy.

"Houston learned a lot of lessons to diversify its economy," said City Controller Chris Brown. "This is the fifth downturn we've had in recent history; the one in the mid-1980s (was) the most severe and drawn out. We put in a plan to begin to diversify the economy."

Founded in 1836, Houston, known as "The Energy Capital of the World" with a population of 2.1 million, dominates U.S. oil and gas exploration and production. It is home to 13 of the nation's 20 largest natural gas transmission companies, 600 exploration and production firms and more than 170 pipeline operators.

In 1985, Houston had 84 percent of its economy based on the oil and gas sector, said Brown, a former banker and financial investor, in a recent interview with Xinhua.

"I remember my parents said it looked like a ghost town," said Brown, whose job is to manage the city's finances. "Today, we are about half that, around 42 percent."

In the current downturn, oil prices hit a low of 26 U.S. dollars per barrel. In February the prices began to rise and today, a barrel is around 40 dollars.

That's still a far cry from the 100 dollars per barrel last experienced in June and July of 2014, he said, but it means that the city is headed in the right direction.

In the mid-1980s, Brown said, Houston began to diversify by building the Texas Medical Center, now the top of its class in the world, and expanding into new types of businesses such as new technologies and green energy.

"One of the things we're very active in today is promoting with our partnerships in exploring downstream oil and gas instead of upstream oil and gas, refining and chemical processes," Brown said.

"There is a 50 billion U.S. dollar investment in downstream oil and gas driven by low natural gas prices. We're also exporting liquified natural gas. These are economic drivers for us that are helping to bolster the economy."

Houston is weathering the current oil prices storm much better than other cities in the Texas, such as Midland and Odessa, which Brown said are impacted by the current crisis as Houston was in the mid-1980s.

In today's Houston, he said, there are signs of a bright future.

"We are experiencing a huge expansion of the Houston Ship Channel, dredging the canal, which has increased imports and exports," Brown said, noting that is creating a large number of jobs and economic activities at a time when the city greatly needs it.

As the largest city in the U.S. state of Texas, Houston also hosts sports venues such as Super Bowl 51 planned for next year, an event expected to bring in a boom in hotel occupancy taxes.

The Greater Houston Partnership, a nonprofit organization, is working with the city and 1,200 member companies and 36 regional development organizations to grow business and trade in the 11-county Southwest Texas region and throughout the world.

Bob Pertierra, the partnership's chief economic development officer, said Houston's economic diversification can also be seen in an investment of 50 billion dollars in petrochemical construction and plant expansion; the life sciences sector in the Texas Medical Center; a global hub for distribution and logistics; and Houston as the number one manufacturing city in the United States.

Pertierra said Houston is also expanding its distribution and logistics, citing collaboration with China's COSCO Container Lines, one of the world's largest transportation services companies, which consolidated all of its North American operation centers into a single Houston location that helped to create jobs.

Just this month, Houston's Global Cities Initiative launched the Houston Metro Export plan to further diversify the economy, he said.

The plan calls for strengthening Houston's position as a world-class exporter by exporting more than the national rate for the next four years, increasing the number of firms that access Houston's export services by 20 percent by 2020, and enhancing the city's position as a global trade and logistics hub.

In recent years, the Partnership has also worked closely with the city of Houston and the Houston Airport System to grow connectivity to Asian countries and regions, Pertierra said.

"Many non-stop flights from Asia have landed at our airports, including ANA from Tokyo, Air China from Beijing, EVA from Chinese Taipei, New Zealand from Aukland and Korean Air Lines from Seoul."

Lisa Givens, Texas Workforce Commission spokesperson, said that even among the oil and gas related industries, job layoffs were slowing down.

"For the most recent week ending April 15 to April 21, 2016, the Gulf Coast area has had 603 initial unemployment claims filed," down from 746 a year ago, he said.

Brown said that once the oil supply problem is past, oil prices will go back up.

In the meantime, the city's diversity in its economy is greatly helping Houston to see the downturn through with a calm eye on the future.

"Houston is an extremely diversified town, second only to New York in general office numbers, and as a result we have international business that attracts from all over the world and 98 direct fight routes to every continent in the world," Brown said.

"More international businesses are doing business in Houston now. Unfortunately, we just have to weather through this downturn, but I'm very optimistic," he said. Endit