For the folks who remain mystified why Houston’s economy has not collapsed with the price of oil, please read below. It hasn’t collapsed because the Houston economy of today bears little resemblance to the Houston economy of the 1980’s.  In the 1980’s (30yrs ago) the Port of Houston was not significant on a national scale, today is it significant on a global one as it is the #1 US port by foreign tonnage (2014) and #2 overall in the US.

To be sure the oil and gas industry is a significant one in Houston, but its decline over the past year is not going to sink the economy. What it will do it take an area growing 3X-4X the national average to one growing at or slightly above it.  That is a big difference from some of the calamitous predictions we heard not too long ago. For a big real estate developer like HHC, it matters little as demand for its offerings remains strong and the oil situation is the difference between 8-10 bidders on a property to “just” 3-4 now.

Still a great place to be in

From the Houston Chronicle:

 The Port of Houston Authority is predicting record levels of cargo this year, as more steel and cargo containers pass over its docks.

As of June, nearly 20 million tons had come through the port, Port of Houston Authority Executive Director Roger Guenther said this week. Steel and cargo containers led the growth, he said, with 20 percent more containers moving through Barbours Cut and the Bayport Container Terminal than last year, and a 26 percent rise in steel imports.

“Business has reached its highest levels across several key business lines during recent years,” Guenther said in his report to commissioners. “And, we must continue to strategically plan for the future opportunities.”

Although Houston’s economy may slow as oil prices remain low, a stronger U.S. economy and growing international trade are driving commerce through the port.

“People don’t realize how international this economy is,” said Patrick Jankowski, senior vice president of research at the Greater Houston Partnership.

“It could be international activity is offsetting the downturn in the oil and gas industry,” Jankowski said. “It’s not a one-to-one offset, but it provides a little bit of a cushion in the downturn.”

Jankowski said much of the growth in port traffic is coming from imports, an indicator of a healthier U.S. economy.

Last year steel shipments set a record at just under 7 million tons, mostly in imports, said the chief port operations officer, Jeff Davis. The port has seen steel taper off, however, as it typically shadows the oil economy.

But in container shipping, “the story is different, it’s not as cyclical,” Davis said. “Every year we set a new record.”

Typically container cargo grows at around 5 percent a year, he said. With labor unrest delaying shipments on the West Coast, however, the Port of Houston saw this segment jump 30 percent from last year as vessels were diverted to Texas.

That growth is subsiding, and now is running about 19 percent higher than a year ago. Still the port expects a record by the end of the year.

Much of the cargo passing through the port is related to local industry – plastic resin and chemicals that come from oil and gas, Davis said. Raw materials and retail products also make up a lot of the traffic.

And the port has been preparing for growth, and it expects more once the expansion of the Panama Canal is complete. That extra capacity helped the port handle extra business diverted from the West Coast this year.

“We have been planning and allocating capital to prepare for the widening of the Panama Canal for years now,” Davis said.

On Monday, the Port Authority took over the Maersk terminal, giving it greater flexibility to work with other companies, he said.

In preparation for the larger ships that will be able to pass through the Panama Canal soon, the Port Authority is spending $68 million to deepen and widen the Bayport and Barbours Cut container terminals, Davis said.

It also invested $50 million in four cranes, nearly 30 stories high, which arrived at the Barbours Cut terminal in May. The cranes weigh 1,505 tons, nearly three times the other cranes at the terminal, and will go into operation in October.

The Houston Ship Channel is on pace to see 8,500 ships this year, Jankowski said, with traffic up 5 percent this year.

“We will continue to see the number of ships using the Ship Channel grow into the future,” he said. “The fact that we’re still handling all this international cargo is one bright spot in what could otherwise be a cloudy sky.”