Archive for the 'Texas' Category

The oil slump and its effect on Texas

Texas Railroad Commissioner David Porter recently quoted the president:

“We cannot drill our way to lower gas prices.” – Barack Obama, March 2010

Well, Mr. President, it appears we did – at least in part. Here’s a synopsis of how a barrel of oil sells for $100 in June and $50 six months later.

  1. American Ingenuity. Through rock fracturing and horizontal drilling,  U.S. oil companies figured out how to extract oil from previously unproductive lands. With barrel prices north of $75, it made economic sense to drill relatively expensive unconventional wells in rural U.S. locations and then transport the runs to market.
  1. Arab Stubbornness. Since oil flows like water in the Organization of Petroleum Exporting Countries (OPEC), they don’t need costly setups to increase production. They can turn it up or down at will. Historically, they have throttled back to keep oil prices relatively stable. Whether the Saudis are irritated that the United States failed to topple Syria’s rogue regime or simply perturbed that U.S. producers haven’t restrained their production, they have decided not to turn off the spigot this time. They seem content with $40, even $20, oil in exchange for a return to their historical market share.
  1. Laws of Economics. Supply is up due to the aforementioned reasons and the resumption of production in Algeria, Libya and Iraq. Meanwhile, global demand has moderated for several reasons. First, China overstated its growth and overstocked. Second, Europe’s economy remains sluggish. Third, stiffer machine efficiency requirements are reducing fuel needs.

 High supply and low demand has caused the price of oil to fall to a new equilibrium.

 A big question among U.S. producers and oil & gas states like Texas is: For what price does oil need to sell in order to maintain profitability? Most seem to think between $60 and $80.

A bigger question is: Was price stability sufficiently considered in recent years or was the focus more on whether wells would produce?

My hunch is companies considered capacity more than price. It was more “Will the ground produce?” and less “Will the market pay?”

Oil firms have begun laying off workers (e.g., Schlumberger recently announced it will cut 10% of its workforce). With Texas’ unemployment rate lower than the national average (5.1% vs. 5.8%), we have some room to absorb.

And Texas’ economy is more diverse today than thirty years ago, though only in terms of employment base. JP Morgan Chase economist Michael Feroli has noted that the industry’s share of state economic output is roughly the same as it was in 1985.

This is cause for alarm, as is the high level of leverage that oil companies used to put wells and pipelines in the ground. Banks now own billions in oil industry loans and trillions in derivative contracts (i.e., oil price hedges).

If prices don’t bounce back in the next 6 – 12 months, banks will sustain hefty losses in the form of loan defaults and underwater contracts. That will limit access to capital in other industries.

Finally, the oil field services companies that sprang up in the last decade will be collateral damage if prices don’t rebound soon. Hopefully, all these players have set aside bounty from the boom to buffer a bust.

Retired Southwest Airlines co-founder Herb Kelleher knows that’s not likely the case. He recently recalled a bumper sticker from the late 1980s: “Dear Lord, give me another boom and I promise I won’t screw it up.”

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Better political mapping will mediate the extremes

Only slightly more than a third of registered voters will vote in today’s mid-term elections. Even in a presidential year, almost half of legal voters forego their constitutional right.

Recently, a political direct mail piece sat on my kitchen table. My son asked me if I was going to vote for the man on the card. I said yes, but that I really didn’t like him that much.

My son struggled to understand. “Why don’t you just vote for someone else?” The short answer is because I don’t care for the principles of his opponent. The long answer is because our system is broken.

As voters, we are less engaged because we are less consequential than ever before. It’s a fact of life: Where you are less needed, you are less present. Star players show up for every game. Benchwarmers come when they can.

Roughly 80% of Congressmen have nothing to fear on Election Day. Their districts are so convincingly one-sided that the chance of an upset is miniscule. They are, for lack of a better term, shoe-ins. No wonder some stink.

What’s more, seventy some-odd Congressmen are unopposed this fall. Assuming they can scrape themselves off the mattress and find their name on the list, they will win. Their constituents are literally unnecessary. So their constituents are disengaged.

Hope can be defined as having options. When people have few or no promising candidate options, they have no hope in the political system.

We live in a time of political extremes. On one hand, most elections are non-competitive exercises in equivocation. On the other hand, Washington, DC, is hyper-competitive and polarizing. Stalemate and stagnation, gridlock and grandstanding are ubiquitous.

Officeholders from “safe” districts cause the impasses. Think about it: If your home district rewards you for purity and not progress, you have little motivation to solve problems. In fact, it behooves you to leave them wanting for job security’s sake. After all, where will you find another job that pays $174,000 a year to maintain the status quo?

Non-competitive districts are the fruit of two things: one, the tendency of like-minded people to settle near one another; and two, political gerrymandering. No human can stop the former. I have an idea for the latter: block political mapping.

It’s pretty basic and quite achievable in the age geographic information systems. No matter how unique a state’s outline may be, you start on the state line in the most northeastern point of the state. You then start drawing a line to the southwest.

At whatever point the line becomes the diagonal of a rectangle that encapsulates the number of citizens a particular political district is required to have, you stop. That is District 1.

Repeat the process until the state (or county, city, etc.) is divided into equally populated, right-angled rectangles. Only the districts along an irregular border such as a river will not be exact rectangles. But they will still be drawn by a non-partisan computer.

Block mapping will bring more competitive races, and rarely does competition fail to increase quality of life. More competitive elections will force parties and philosophies to put their best, least smelly feet forward. “Good enough” candidates will no longer be good enough to win.

Kevin Thompson writes weekly for The Boerne Star in the Texas hill country. He can be reached at

Ebola victim has Texas connection

The two Americans infected with the Ebola virus in Liberia, Africa, have made national news in the last week. One, Dr. Kent Brantly, completed his undergraduate studies at Abilene Christian University (ACU) and his residency training in Fort Worth.

Though I have never met Dr. Brantly, I imagine him much like his older brother, Chad, whom I knew at ACU. Chad was the gentlest, funniest, teddy-bear-est of a man you’ll ever meet. He’s now a dentist in San Angelo.

Even without the alma mater connection, Dr. Brantly’s story would have captured me. The Indiana native was overseeing the Samaritan’s Purse Ebola care center in Monrovia, Liberia, when he was diagnosed with the disease. Samaritan’s Purse is the mission organization of Franklin Graham, son of legendary evangelist Billy Graham.

The recent Ebola outbreak in southwestern Africa has infected roughly 1,300 people and killed more than 700. The symptoms of the disease, which is transferred only through bodily fluids, start like malaria’s: fever, nausea, stomach pain. Eventually, uncontrollable bleeding from body openings can take the lives of victims.

Now why would a bright, young physician leave the prosperity and esteem of American medicine to go to an unknown land to care for victims of a disease with an unknown cure?

I’ll let him answer that. This from a message he gave to his childhood church before leaving for Liberia:

“God has a call on my life. I never heard the voice of God say, ‘Kent, you need to become a doctor and go to Liberia to be a missionary.’ But what I heard were the encouraging words and actions of my friends and family. When you connect the dots, you see a grand picture that God has used to draw my life in a certain direction.”

After seeing images of Dr. Brantly in a haz-mat suit caring for Ebola patients, I remembered another medical missionary.

Father Damien was a Catholic priest who travelled to the then Kingdom of Hawaii in the 1870s. One of the kingdom’s islands, Molokai, had been quarantined as a leper’s colony.

In 1873, Damien volunteered to go to Molokai to care for the lepers even though leprosy was thought to be highly contagious. There, Damien dressed ulcers and gave comfort while building reservoirs, homes and churches. He also made coffins and dug graves.

For sixteen years, Damien struggled alongside the lepers before finally succumbing to the disease himself. “I make myself a leper with the lepers to gain all to Jesus Christ,” he told his brother.

I have no doubt that Dr. Brantly meticulously attempted to avoid contracting Ebola. The haz-mat suits were not worn for comfort. I also have no doubt that he knew there was a chance he might still become infected.

But when you are in pursuit of a purpose far above earthly health or worldly wealth, one’s view of risk changes. The thought of not answering a spiritual call seems more risky than the prospect of physical death. “To live is Christ, to die is gain” is how one missionary once put it.

As of press time, Dr. Brantly’s recovery prospects appeared good as warriors continued to pray. His televised ambling from ambulance to Atlanta-area hospital resembled Neil Armstrong’s “one giant leap for mankind” moonwalk.

Indeed, Dr. Brantly is empowered by something out of this world.


Kevin Thompson writes weekly for The Boerne Star in the Texas hill country. Follow him at

An attorney we should hire

Dan Branch

It’s not every year that you get to vote for someone you know well in a statewide election. In the interest of making the most of a rare opportunity, I want to tell you about my good friend Dan Branch.

Some people really love politics and some people really love governing. Few people love both politics and governing. The politicians who end up doing something stupid in office? They’re usually those who love the challenge of getting elected but who get bored with the minutia of governing.

Dan Branch loves good politics but not at the expense of good governance. Good politics made him representative of one of the most influential parts of Texas (Downtown and Park Cities Dallas). Good governance has kept him there for more than a decade.

Good politics made him a state budget writer in his very first term in the Legislature. Good governance made him push to reform the state’s public school finance system – changes that provided relief to Robin Hood districts.

Good politics made him chairman of the Higher Education Committee in the Texas House of Representatives. Good governance led him to institute a matching grant program in order to spark more Tier One research institutions in Texas.

Branch’s politics and governing stem from his legal training and sharp business mind. After finishing SMU Law School, he worked a few years for a big law firm in New York City before returning to Texas to start his own small firm.

He has represented large and small businesses alike and has negotiated many complex real estate transactions. He arguably has a more extensive and well-rounded legal background then either of his two Republican primary opponents. But that’s not the main reason I’m voting for him.

I am voting for him because I have seen behind-the-scenes the caliber of the man he is. The way he treats his his wife and their five children, the way he treats a random constituent on a street.

If you schedule a meeting with him he may very well be a few minutes late because he has given his undivided attention to whomever has just crossed his path.

Branch is as conservative as you or I, though he may not show up on the far right propaganda. This is probably because votes are easily misconstrued in the Legislature.

Branch is a pragmatist who understands that when the people hand a political party the reins of government, they expect results not finger-pointing.

Results are why he will show up in the endorsements of the Combined Law Enforcement Associations of Texas, the Texas Municipal Police Association, the Texas Association of Business and the Texas and Southwestern Cattle Raisers Association, among others.

I know him well because I served on his staff during his early days in the Legislature. Though I worked for him, he routinely outworked me, often staying up late to absorb more information that would later lead to better decisions.

So my calculus is fairly simple: Sharp mind plus high integrity plus strong work ethic equals a really solid candidate for Texas Attorney General in the March 4th Republican primary. Early voting started today. Read more on Dan at

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