Many people are unaware that there are at least 200 ghost towns in Texas, with one author claiming that there may be over 1000 in the state. Although mining and mineral slowdowns have been the proximate cause for some ghost towns, there are many other reasons as well.
Most rural towns in Texas had growing populations from the 1850s until the early 1900s, after which a significant number started seeing noticeable declines. In some cases, highways or railroads bypassed the towns. In other cases, drought, relocation of the county seat, or even the creation of manmade lakes caused towns to shrink dramatically or die off altogether. In general, however, the most common reason ghost towns came about in Texas has to do with the systemic mechanization of agriculture that began in the 1930s – first with the introduction of the tractor, and not long after, the combine harvester.
With fewer and fewer people working on farms, the commercial activity associated with many small towns ceased to exist. Many people moved to metro areas. As but one example of this long-developing trend, Texas now boasts the fourth and fifth largest metropolitan statistical areas in the United States: Dallas-Fort Worth and Houston. Texas used to be a rural state, but it has transformed into one that is far more urban in character than in the past.
No doubt, the Eagle Ford Shale area in South Texas has seen ups and downs as a result of volatile oil prices. In 2016, rig counts dropped below 40 when oil prices bottomed out at $26 per barrel. However, since then, oil prices have rebounded to around $50 per barrel and rig counts now exceed 80.
While at the peak of activity in the Eagle Ford, rig counts exceeded 260, the exploration and production companies have introduced efficiencies that will make it unlikely to see such large numbers of rigs operating in the future. Many more wells can now be drilled from a single pad than in the past, and completion times have dropped from around 40-45 days to between 15-20 days.
Despite the slowdown last year, economic impact for the Eagle Ford Shale region remained robust, at around $50 billion. In addition, local sales and property tax revenues in 2016 were higher than in the years prior to the discovery of shale oil and gas in the Eagle Ford. Indications are that 2017 will see a solid comeback in economic impact for the region. For the first half of 2017, oil and condensate production in the Eagle Ford remains at around one million barrels per day. Roughly 2.3 billion barrels of oil and condensate have been produced in the Eagle Ford to-date, with an estimated total recoverable of 10-12 billion barrels. There is a lot of life left in the Eagle Ford.
It’s also worth noting that because of unconventional oil and gas extraction techniques, the U.S. is now effectively the world’s swing producer. Analysts have indicated that production costs for oil using unconventional techniques make the U.S. the second lowest cost producer after Saudi Arabia, and second lowest cost producer of natural gas after Qatar.
Communities in South and West Texas certainly face challenges because of the cyclical nature of the oil and gas industry. However, through economic diversification, wise stewardship of oil and gas-related income streams and strong governance, rural communities in Texas that benefit from the oil and gas industry are well-positioned to weather the inevitable periodic downturns and come back stronger than ever.
Dr. Thomas Tunstall is the director of the Center for Community and Business Research at the UTSA Institute for Economic Development.