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Annual Report 2015

AFTER THE BOOM
Texas Economy Downshifts
in Energy Bust

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Letter from the President
Robert S. Kaplan

Annual Report 2015

The Eleventh District economy proved to be highly resilient in
2015 despite substantial declines in oil prices and related
capital spending. This resiliency is a testament to the
diversiﬁcation of the Texas economy as well as the
resourcefulness of the citizens of this region.
I became president and chief executive ofﬁcer of the Federal Reserve Bank of
Dallas in early September 2015. In this role, I have been enormously impressed
with the quality, rigor and dedication of the staff who work in the Eleventh
District and throughout the entire Federal Reserve System. They are truly
outstanding.
I have also been gratiﬁed by the warm welcome and hospitality of the people of
the Eleventh District. They have gone out of their way to help me integrate into
the community and more effectively do my job. I have learned the essential role of
the private sector in informing our economic research and policy work. I am
grateful for the dedication of our board members, survey respondents and other
advisers who consistently answer our requests for time, information and advice.
This year's annual report chronicles how we have advanced as a region and
institution. The collection of economic essays, "After the Boom: Texas Economy
Downshifts in Energy Bust," discusses the remarkable resilience of the Texas

economy and its path forward along several key dimensions—energy, banking,
housing, labor markets and international trade.
The energy industry now accounts for approximately 2 percent of Texas
employment and 9 percent of GDP. This is a good deal lower than the 1980s when
the downturn in energy helped drag the state into a severe recession.
The region's transformation into a more highly diversiﬁed economy has been
aided by a steady migration of people and ﬁrms to Texas. Since 2000, the state's
average rate of population growth has been almost a full percentage point higher
than the U.S. as a whole. As a result, despite the headwinds from energy, Texas job
growth was 1.3 percent in 2015. Dallas Fed economists expect between .5 and 1
percent growth in 2016.
As we look beyond 2015 and 2016, I am very optimistic about the future of this
district. As the headwinds from energy begin to fade I believe our great strengths
will come to the fore. Our central location, favorable business and regulatory
climate, skilled workforce and numerous ports are all key elements of this
optimism. While there are various challenges relating to educational attainment
levels, income inequality and access to health care, I am conﬁdent that the Texas
can-do attitude will meet these issues head on.
I am honored to serve the people of this district and the nation. I look forward to
getting to know you better and working with you to help build our future success.
Robert S. Kaplan
President and CEO
Federal Reserve Bank of Dallas

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Slow Growth in Texas After
Energy and Trade Ebb
Pia M. Orrenius and Keith R. Phillips

Annual Report 2015

The sudden reversal in Texas’ economic outlook in
2015 is the focus of ﬁve essays in this annual report.
State job growth downshifted from 3.7 percent in 2014 to 1.3 percent in 2015.
Declining oil prices were the main culprit, but a stronger dollar also played a role,
helping reduce state exports. The end result has been a recession in the goodsproducing sectors of energy extraction and manufacturing, which together lost
113,000 jobs last year. The service-providing and construction sectors,
meanwhile, continued to expand, gaining 271,000 jobs in 2015.
In the wake of this shift, Federal Reserve Bank of Dallas economists assess what’s
next as Texas’ economy moves forward.
In their essay, Michael Plante and Mine Yücel lay blame for the oil price downturn
on an excess supply of crude oil. Texas rode the shale oil boom for several years
until a global bust made the domestic oil industry a victim of its own success. U.S.
crude production had soared with the adoption of hydraulic fracturing, or
fracking, of shale formations, from 5.5 million barrels per day in 2010 to 9.4
million barrels per day in 2015. The U.S. became the world’s third-largest
producer of crude. Once oil prices began sinking, the Organization of the

Petroleum Exporting Countries didn’t act to restrict supply, and prices dropped
further. Balance in the market—deﬁned as the point at which inventories stabilize
—is at best two years away, Plante and Yücel suggest.
For many Texans, the collapse in oil prices brings back haunting memories from
the 1980s recession and banking crisis. Oil prices fell 70 percent between 1982
and 1986, and one-third of Texas banks failed or needed Federal Deposit
Insurance Corp. assistance, as Kory Killgo and Robert Moore remind us in their
essay on the state’s banking sector. While they caution that the current oil bust
will be no repeat of the 1980s, early warning signs confront area banks.
Commercial and industrial loan performance deteriorated sharply in the second
half of 2015, and new lending slowed. Texas banks are also heavily exposed to
commercial real estate, which has continued to do well even while remaining
vulnerable to ﬂagging demand from energy and related ﬁrms. While loan demand
has receded from its lofty highs—with additional slowing likely in the near term—
institutional buffers installed since the 1980s, such as the introduction of
interstate banking, make a repeat of the past state banking crisis highly unlikely,
Killgo and Moore conclude.
John Duca’s essay focuses on Texas housing markets and the failure of the supply
of new housing to keep up with soaring demand during the shale oil boom. In a
state with a historically responsive housing supply, this unusual scenario led to a
record run-up in Texas house prices. By comparing prices with rents and incomes,
Duca concludes areas vulnerable to the energy downturn, such as Houston, may
experience mild declines in house prices while other large Texas metros may
simply experience slower price appreciation. The decline in affordability,
meanwhile, is unlikely to completely recede; the state may have permanently lost
some of its cost-of-living edge relative to the rest of the nation.
Pia Orrenius surveys state labor markets in the wake of the shale oil boom,
pointing out that the boom’s end may exacerbate widening wage inequality in
coming years. Commodity run-ups tend to create relatively high-paying jobs
without raising the skill premium, funneling good jobs to blue collar workers.
Without the countervailing force that an energy boom brings, Texas is exposed to
4

the long-run national trend of labor market polarization, which disproportionately
creates jobs at the bottom and top of the wage distribution while the middle
stagnates.
Mark Wynne’s essay discusses the large and growing volume of Texas exports and
addresses the impact of China’s economic slowdown. By some measures, up to
one-third of global economic growth in recent years can be attributed to China—a
worrisome statistic given that Chinese authorities expect much weaker growth in
the next several years. While Texas exports to China have grown at an annual rate
of more than 15 percent over the past two decades, China only comprises 5
percent of state exports. Wynne concludes that this small share will limit the
impact of China’s economic slowing and the depreciation of its currency.
From 2010 to 2014, the Texas economy grew strongly, fueled in part by the
booming energy sector and increased exports. This expansion occurred across the
entire wage distribution, with much stronger job growth than the nation in
middle- and high-wage jobs. The oil price collapse and strengthening dollar in
2015 sharply slowed economic growth. Still, relative to the 1980s and other
energy-producing states, Texas performed remarkably well.
Heading into 2016, weak oil and natural gas prices and a still-strong dollar suggest
challenges remain. Growing numbers of bankruptcies in the oil and gas sector and
softening trade with China will likely provide a backdrop that will remind some of
the state’s bust three decades ago.
Dallas Fed economists who have analyzed the state’s economy over the past
several decades conclude that, despite the signiﬁcant challenges, Texas will
continue adding jobs and probably avoid sharp declines in nonenergy sectors such
as banking and residential real estate. While job growth will likely be weak—with
activity concentrated at the low and high end of the pay distribution—a more
diversiﬁed Texas economy will help the state avoid a repeat of the 1980s.

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

The Texas Energy Industry:
From Boom to Gloom
Michael D. Plante and Mine K. Yücel

Annual Report 2015

Horizontal drilling and hydraulic fracturing of shale
formations have transformed Texas’ oil and gas sector.
The shale boom contributed to robust growth in the state after the Great
Recession by boosting oil production more than threefold from 2010 to 2015.
However, Texas economic growth weakened markedly in 2015 due to falling oil
and gas prices, and the state faces another challenging year in 2016.
Ironically, the energy sector’s success helped create the current low-price
environment. The new technology dramatically increased crude production in
Texas and elsewhere in the U.S. Combined with more supply from countries such
as Iraq, Brazil and Canada, the market found itself unexpectedly awash in oil.
Saudi Arabia, the major swing producer, was forced to confront a difﬁcult choice.
It chose to maintain production levels instead of cutting output to bolster prices. A
sharp crude oil price decline followed in late 2014.
Lower oil prices have made it less proﬁtable to drill in shale areas, sharply
curtailing drilling activity. Rig counts nationwide have fallen 75 percent (Chart 1).
Output, however, has remained incredibly resilient; production peaked at almost
9.7 million barrels per day in April 2015 and remained relatively high throughout
the year. The story is similar for Texas.

Drilling productivity is a major factor in the lagged response of oil output. As
prices fell, ﬁrms focused on the most productive areas, working to reduce costs
and increase efﬁciency. As a result, production remained stubbornly high in
several areas despite sharply reduced rig counts.
Low oil prices have hurt the ﬁnancial status of numerous oil companies, and a
large number of them face uncertain prospects in 2016 even after achieving
efﬁciency gains.1 Many companies are also affected by extremely low U.S. natural
gas prices, another result of the shale boom. At least 69 U.S.-based oil and gas
companies went bankrupt in 2015; more are likely to do so in 2016.
The low oil price environment will continue challenging the Texas economy,
especially in Houston and the oil-producing regions of the Permian Basin in West
Texas and the Eagle Ford Shale in South Texas. The industry has lost nearly 60,000
jobs since the price collapse and may see further cuts if prices remain low. The
carnage has spilled over into Texas manufacturing, which has faced the added

impediment of a strong U.S. dollar that has increased the foreign currency cost of
exports. Overall Texas employment grew only 1.3 percent in 2015, less than half
the 2014 pace.
On the bright side, while Texas is best known as an oil and gas producer, it is also
home to signiﬁcant petrochemical and reﬁnery sectors that have beneﬁted
dramatically from the shale boom.
Unfortunately, the outlook for the petrochemical sector has also become less rosy
due to lower oil prices—though it is not nearly as pessimistic as for oil and gas
producers. The petrochemical sector has beneﬁted from low domestic prices for
natural gas. Over time, as global oil prices have fallen, the cost advantage has
eroded for U.S. petrochemical companies vis-à-vis their foreign competition.
Dimmer prospects may diminish new petrochemical sector investment along the
Gulf Coast, although current projects will likely keep construction active through
2017. The strong dollar and weaker global demand are not helping, either.
At the same time, reﬁners have beneﬁted from the recent oil price decline. Lower
gasoline prices have helped spur increased demand from U.S. consumers,
bolstering reﬁning margins. The shale boom has also led to signiﬁcantly larger
exports of reﬁned products, with volumes from the Gulf Coast more than doubling
between 2008 and 2014.
Some expected the end of the U.S. crude oil export ban in December 2015 to
herald a surge in exports. Such a scenario is unlikely, at least in the short to
medium term. The ban became less relevant as production fell. Prices for
benchmark West Texas Intermediate and Brent crude oil are quite close, creating
less of an incentive for large-scale exports. In the long term, if oil prices move up
and Texas oil production increases, the implications of access to the global market
will be more signiﬁcant.
The shale boom revolutionized the oil and gas industry in Texas but has not helped
the state avoid the almost inevitable busts that seem to follow such booms. The
industry, and the areas in Texas intimately connected with it, will likely continue to
8

face signiﬁcant challenges until oil prices recover. The state’s ability to continue
growing in this challenging environment is a testament to the diversity and
resiliency of its economy.

NOTE
1. “OPEC Tips Crude Oil Markets over the Cliff,” by Navi Dhaliwal and Martin Stuermer, Quarterly Energy

Update, Federal Reserve Bank of Dallas, Fourth Quarter, 2015.

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Texas Banks Enter This
Downturn on Better Footing
Kory Killgo and Robert R. Moore

Annual Report 2015

The oil price plunge that began in mid-2014 is
reminiscent of the state’s big bust nearly three
decades ago, when oil prices declined more than 70
percent in real terms.
More than 700 banks and savings and loans, including nine of the 10 largest, failed
in Texas from 1986 through 1990.
The recent price decline of 65 percent through the end of 2015 raises the specter
of history repeating itself. That is a disturbing prospect given that the 1980s
banking crisis, whose roots extended beyond energy woes, entailed substantial
cost to the Federal Deposit Insurance Corp. and likely contributed to the worst
recession in Texas since the Great Depression.
By most measures, Texas banks are on sound footing today. Noncurrent loans as a
percent of total loans are roughly 40 percent lower and proﬁtability is higher for
institutions in the state relative to those in the rest of the country. But some
clouds are gathering. While past-due commercial and industrial (C&I) loans
remained low as a percent of total C&I loans in 2015, they increased from 1.08
percent in September to 1.28 percent in December.

Noncurrent C&I loans—those 90 or more days past due, plus those no longer
accruing interest—began increasing at Texas banks in 2014 and were up 92
percent year over year through fourth quarter 2015 (Chart 1A). A total of $829
million in C&I loans were noncurrent as of Dec. 31, somewhat more than after the
Great Recession. By comparison, noncurrent C&I loans increased 70 percent and
were at only 31 percent of their postrecession high in the U.S., where the Great
Recession’s impact was far greater than in Texas (Chart 1B).

C&I loans include those to energy producers, whose repayment prospects are tied
to energy prices. More broadly, bank loan portfolios could be impacted by energy
prices indirectly. Many businesses not in that sector have important energy
industry customers and operate in geographic areas where energy ﬁrms are major
drivers of economic activity.
Another cloud on the horizon is the relatively heavy concentration of commercial
real estate (CRE) lending. Capital exposure to CRE is 60 percent larger at Texas
banks than at banks nationally. And while vacancy rates and banks’ past-dues
generally remain low, they are moving in the wrong direction and concentrations
bear watching.
Despite the unsettled outlook, Texas banks are better positioned today than
during the 1980s oil price collapse. The state economy is more diversiﬁed, with
energy playing a smaller role. The energy sector accounts for about 2 percent of
Texas jobs, down from a high of 4.7 percent in 1982. Additionally, riskmanagement practices have improved considerably at Texas banks since the
1980s, better positioning them to confront economic shocks.
Beyond these important mitigating factors, signiﬁcant changes in the banking
industry’s structure since the 1980s have bolstered Texas banks’ ability to
weather low oil prices. Arguably, the most important of these involves the ability
to conduct business across state lines. In the 1980s, Texas-based institutions
could not establish branches outside the state; their counterparts from outside
Texas could not open branches here.
These restrictions have since loosened, allowing a level of geographic
diversiﬁcation that did not exist in the 1980s.
Today, 18 percent of deposits in banks headquartered in Texas are held outside
the state. The freedom to operate in other states allows area banks to limit their
exposure to the Texas economy and its associated energy industry ties. Moreover,
only 38 percent of deposits in Texas bank branches belong to institutions
headquartered in the state.
13

These structural changes, coupled with the current strength of the regional
banking industry, suggest that the clouds on the banking horizon are unlikely to
unleash a storm of 1980s proportions.

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Will Oil Decline Lead to a House
Price Bust?
John V. Duca

Annual Report 2015

The correlation between house prices and oil booms
raises concerns because oil prices have fallen nearly as
much from their 2014 peak (about 66 percent) as they
did during the mid-1980s oil collapse (70 percent).
That 1980s collapse preceded a long housing bust.
Texas house prices barely rose before the 2008-09 ﬁnancial crisis even as housing
markets boomed elsewhere in the U.S. But after the crisis, prices increased faster
in Texas than the nation amid rapid expansion of shale oil production.
How vulnerable are Texas house prices this time? Two gauges provide insight—the
ratio of house prices to apartment rents, and home affordability in terms of
income and monthly house payments.
OIL-INTENSIVE TEXAS CITIES SOMEWHAT VULNERABLE

A high price-to-rent ratio suggests that house prices are expensive relative to the
alternative cost of renting, and that future prices are likely to grow slowly or
possibly fall. The ratio of house prices to rents is a relative cost measure akin to a

stock’s price-to-earnings ratio. The price-to-rent ratio tends to be higher when
inﬂation-adjusted interest rates—including mortgage interest rates—are low and
boost the demand for relatively inexpensive owner-occupied housing.
In the short run, the price-to-rent ratio tends to swing less with demand in areas
where the housing supply is very responsive to prices, reﬂecting regulations and
geography that keep construction costs low. Housing supplies in Texas cities, for
example, have historically been less constrained than in northeastern U.S. cities.
Thus, local house prices are best compared to those of cities with similar supply
characteristics.1 Even then, industry fortunes can affect individual cities
differently.
In Dallas and Houston, price-to-rent ratios were elevated during the energy boom
of the late 1970s and early 1980s, fell during the oil bust of the late 1980s and
early 1990s and aligned with comparable cities from the 1990s through 2009
(Chart 1). Since then, the ratio has risen about 14 percent in Dallas and 23 percent
in Houston.

Because house prices are slow to fall following modest overvaluations, Dallas
could experience sluggish growth in house prices relative to rents. Houston is
more exposed to energy and could see house prices decline moderately and then
ﬂatten, leading to a fall in prices relative to rents, which are likely to rise.2
Another valuation gauge is the National Association of Home Builders/Wells
Fargo Housing Opportunity Index (HOI), which tracks the share of homes sold
that a median-income household can afford. Affordability is deﬁned as mortgage
payments no greater than 28 percent of income, assuming a 10 percent down
payment with conforming mortgage interest rates.
Typically, HOI data imply that consumers can more easily afford housing in Texas
than elsewhere in the nation. However, third quarter 2015 ﬁgures indicate this is
no longer the case for three large Texas cities. The share of homes sold that a
median-income family could afford was 54 percent in Dallas, 59 percent in Austin
17

and 60 percent in Houston. That compares with 62 percent in San Antonio and the
nation. Furthermore, HOI readings for the three cities are below averages seen
during more normal housing market conditions in 1993–2000, with the averages
down 9 percentage points in Dallas, 5 percentage points in Austin and 8
percentage points in Houston.
Nevertheless, the downside risk to Texas house prices may be less than these
measures suggest. Before the bust of the late 1980s to early 1990s, homebuilders
created a signiﬁcant supply overhang fueled by excessive local lending. During the
recent oil boom, the housing supply response was much more restrained, limiting
overbuilding and inventories of unsold homes that could later depress house
prices.
Indicators suggest that Texas cities less exposed to energy, such as Dallas, could
see below-normal price growth in coming years before returning to more usual
levels, while areas more exposed to energy, such as Houston, face a somewhat
greater risk of modest house price declines.

NOTES
1. We use a classiﬁcation of cities based on Albert Saiz’s estimates for large U.S. cities and available CPI
rent data. Sources include “The Geographic Determinants of Housing Supply,” by Saiz, Quarterly

Journal of Economics, vol. 125, no. 3, 2010, pp. 1253–96, and “The Long-Awaited Housing Recovery,”
by John V. Duca, Federal Reserve Bank of Dallas 2013 Annual Report, Federal Reserve Bank of Dallas,
2014.
2. See “Texas Metros’ Rapid Growth Likely to Slow Following Energy Price Drop,” by Amy Jordan, Federal
Reserve Bank of Dallas Southwest Economy, First Quarter, 2015.

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Energy Bust Bad News for Job
and Wage Growth
Pia M. Orrenius

Annual Report 2015

Texas labor markets logged remarkable gains during
the 2005–14 shale oil and gas boom but are beginning
to buckle under an intensifying oil bust.
The state unemployment rate stood at 4.6 percent in December 2015, up from a
low of 4.4 percent four months prior. Job growth slowed to 1.3 percent in 2015,
less than half its 2014 rate of 3.7 percent and below national job growth,
something that hasn’t happened since 2003. The Dallas Fed is forecasting less
than 1 percent job growth in 2016, well below Texas’ long-run trend and a ﬁgure
likely to be revised down if oil prices slide further.
With the oil-driven boom came plenty of jobs, both low- and high-paying. Texas
employment grew fastest (32 percent) in the bottom pay quartile—jobs paying
$10 per hour or less—followed by 23 percent growth in the top two quartiles—
jobs paying over $16 and $26 per hour, respectively (see gray bars in Chart 1A).1
Second-quartile jobs—which pay between $10 and $16 per hour—grew the
slowest, expanding 17 percent.
Texas job growth looks truly remarkable when compared with growth in the rest
of the country over the same period (see orange bars in Chart 1A). Despite
widespread claims that Texas created primarily low-wage jobs, this was actually
19

more the case in the rest of the U.S. rather than in the state over this period.2

While the causes driving such broad-based job growth in Texas are many and
varied, the shale oil and gas boom likely played an important role.3 The fastestgrowing sectors from 2005 to 2014 also paid the highest hourly wages. Oil and
gas employment grew at an 8.1 percent annual rate and, in 2014, paid an average
hourly wage of $31.
Professional and business services averaged 3.1 percent annual growth and paid
$29 per hour in 2014. Construction expanded at a 1.8 percent annual rate and, in
2014, paid an average hourly wage of $27. In 2015, when oil prices fell to below
half their 2014 levels, employment gains became concentrated in industries with
lower average wages—leisure and hospitality, paying roughly $14 per hour, and
education and health, $25 per hour.
Strong growth in high-paying sectors during the shale oil boom likely lent stability
to the Texas wage distribution; in contrast, the middle and upper wage quartiles
shrank markedly in the rest of the nation. Chart 1B shows the change in the share
of employment represented by each wage quartile. Whereas each wage quartile
accounted for 25 percent of employment in 2005, the two middle quartiles shrank
over time by 3 percent and 7 percent, respectively, in the U.S. By 2014, they
accounted for just 47 percent of employment. The top U.S. quartile contracted by
4 percent. The bottom quartile, meanwhile, grew by 15 percent and accounted for
more than 28 percent of jobs by 2014. The changes in Texas were similar in
direction but of lesser magnitude.
Absent the shale boom, cyclical dynamics and secular trends helped account for
the concentration of national job growth in the lowest wage quartile over the
period. The Great Recession wreaked havoc on the U.S. job market, destroying
both blue- and white-collar jobs. However, low-wage jobs recovered faster than
high-wage jobs after the recession, accounting for some of the patterns observed
in the data and implying the high-skill labor market will continue to improve.4
The most pronounced of the secular trends is labor market polarization, the
hollowing out of the wage distribution as job opportunities grow
disproportionately at the extremes. The loss of middle-class jobs—deﬁned here as
21

the one-half of all jobs that are in the middle of the wage distribution—remains
ongoing.
Labor economist David Autor of the Massachusetts Institute of Technology
documented the polarization trend in a 2010 study.5 He showed that, since 1980,
the share of jobs in the middle of the skill distribution has been declining, while
the shares at the bottom and top have been growing. The media refer to this
phenomenon as the “shrinking middle class.” The drivers of polarization include
technology and globalization. With advances in technology, routine tasks have
been automated. With globalization, some work is now performed in countries
with access to cheaper labor.
A primary reason energy booms may defy polarization trends is that they create
well-paying jobs that cannot be offshored and do not require college degrees.
Blue-collar booms, thus, temporarily restore some of the jobs lost due to
automation (technological change) and globalization. For the time being, that
counteractive force has gone the way of oil prices, and we can expect recent Texas
labor market trends to look a little more like those in the nation as the energy
sector continues to decline.

NOTES
1. Wage quartiles are constructed at the beginning of the period by dividing all workers into quartiles
based on their hourly wage. In Texas, the ﬁrst quartile includes jobs paying less than $9.96; the second,
$16.23; the third, $26.37; and the fourth, above $26.37. The wage cutoffs are slightly higher for the
remainder of the U.S. ($11.46, $18.03 and $28.71). Once the quartiles are constructed, overall job
growth is measured by quartile, and the percent change in the quartile’s share of employment is
plotted.
2. See “Employment Growth and Labor Market Polarization in the United States and Texas,” by Melissa
LoPalo and Pia M. Orrenius, in Ten Gallon Economy: Sizing Up Economic Growth in Texas, by Orrenius,
Jesus Cañas and Michael Weiss, eds., New York: Palgrave Macmillan, 2015.
3. Texas typically grows about twice as fast as the nation; favorable factors include rapid population
growth, strategically located land and seaports, low taxes and light business regulation.
4. See "The Low Wage Recovery: Industry Employment and Wages Four Years into the Recovery,"
National Employment Law Project data brief, April 2014.
5. See “The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and
Earnings,” by David Autor, Center for American Progress and the Hamilton Project, 2010.

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

China Slowdown: Little
Headwind for Texas
Mark A. Wynne

Annual Report 2015

The much-heralded slowdown of growth in China
presents a limited challenge to Texas’ growth because
of the state’s relatively small direct trade exposure.
However, deceleration in China that morphs into a broader global drag and spills
over to Texas’ main trading partners—namely, Mexico and Canada—would pose a
more signiﬁcant risk.
Texas has been the top U.S. exporting state since 2002. Overseas sales of
petroleum products, manufactured goods and agricultural commodities exceeded
$287 billion in 2014. Since 1998, the dollar value of Texas exports has risen at an
average annual rate of more than 8.5 percent, or about 3 percentage points faster
than the U.S. rate, making exports an important contributor to the state’s growth
over the past two decades.
The upside of this global orientation is that when the global economy is doing well,
Texas beneﬁts. The downside, however, is that when global growth is weak or
faltering, Texas growth suffers.

The big story in the international arena over the past quarter century has been
the emergence of globalization—the increased economic integration of the
various nations of the world—which has taken the form of greater cross-border
ﬂows of capital, labor and goods.
To many people, globalization is shorthand for one thing: the extraordinary
expansion of the Chinese economy. By opening to international trade and
liberalizing markets, living standards in China have gone from 2.5 percent of U.S.
levels in 1980 to 25 percent of U.S. levels today, according to recent International
Monetary Fund (IMF) estimates.
China is already the world’s largest economy, at least when measured on a
purchasing power parity basis, which attempts to correct for differences in price
levels between rich and poor countries. And by virtue of its size and rapid increase
in recent years, about one-third of global gross domestic product growth in recent
years can be attributed to China.
At a very basic level, Texas export growth is driven by two factors: the state’s
exports’ global competitiveness and how rapidly growth is occurring in world
markets, including the Texas market itself. With regard to China’s impact, we must
also consider that country’s share of Texas exports.
Texas export competitiveness is determined by the dollar price of its goods and
services and also the exchange rate between the dollar and the currencies of the
nations to whom it exports. As of 2014, Texas exported to 166 countries, almost
all with currencies whose value ﬂuctuates against the dollar.
The other key determinant of Texas export growth prospects is the rise in demand
in target markets.
Two key developments in China during 2015 gave rise to concerns that Texas
exports to that country may be somewhat weaker going forward. First, there is
the widely noted slowing of China’s growth rate. For several decades, China’s
economy climbed at unsustainable rates as it caught up with the rest of the world.
25

In November 2015, the Chinese government leadership suggested a growth
target for 2016–20 of 6.5 percent, well below the double-digit rates in the years
prior to the 2007–09 global ﬁnancial crisis (Chart 1).

The second key development was the loosening of the link between the Chinese
renminbi and the dollar. Historically, the People’s Bank of China (PBoC) has tried
to manage the exchange value of the renminbi to limit ﬂuctuations against the
dollar. For many years, this led to accusations of currency manipulation to obtain
an unfair competitive advantage in international markets.
Measured in real terms against all of its trading partners, which is what ultimately
matters for international trade, the renminbi appreciated by about 26.4 percent
between 2005 and 2015.1 The IMF, at the conclusion of its Article IV consultation
mission to China in 2015, noted that the real effective appreciation of the
renminbi over the preceding year had brought it to a level that is no longer
undervalued.2

But what matters for Texas’ trade prospects with China is the bilateral exchange
rate between the dollar and the renminbi. From July 2014, when the dollar began
its recent upward trend, through the end of 2015, the renminbi depreciated only 3
percent against the dollar. By contrast, the Mexican peso, the Canadian dollar, the
euro and the yen depreciated by more than 20 percent.
While the value of Texas’ exports to China has increased at an average annual rate
exceeding 15 percent over the past two decades, the rate of expansion has slowed
markedly in recent years. Exports to China increased just 5.7 percent in 2015, and,
despite earlier rapid growth rates, accounted for only 4.6 percent of total Texas
exports. This small trade exposure to China will limit the impact of a slowdown
there on Texas’ expansion.
On the other hand, recent policy developments in China will make trade with that
country more sensitive to exchange rate movements. In December, the PBoC
launched a new trade-weighted index for the renminbi that tracks its value
against 13 currencies, including the dollar. There are growing expectations that
the PBoC will seek to manage the value of the renminbi against this new basket
rather than against the dollar, which will potentially mean greater future volatility
in the dollar-renminbi exchange rate.

NOTES
1. As measured by the JPMorgan Chase & Co. broad real trade-weighted index deﬂated by the producer
price index.
2. See "IMF Staff Completes the 2015 Article IV Consultation Mission to China," International Monetary
Fund press release, May 26, 2015.

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Year in Review
The Federal Reserve Bank of Dallas in 2015 continued to
make signiﬁcant contributions toward fulﬁlling its mission of
serving the American public by informing and inﬂuencing the
nation's monetary policy, fostering ﬁnancial stability and
delivering high-quality services to the U.S. government and
ﬁnancial institutions in the Eleventh District.
One milestone for the Dallas Fed was the naming of Robert S. Kaplan as the
Bank's 13th president and CEO. Before assuming the role of Bank president,
Kaplan was senior associate dean at Harvard Business School and Martin
Marshall Professor of Management Practice. Prior to joining Harvard, Kaplan was
vice chairman of Goldman Sachs Group Inc. He is the author of several books on
management and leadership. He represents the Eleventh Federal Reserve District
on the Federal Open Market Committee (FOMC) and oversees the 1,200
employees of the Dallas Fed.
Since taking ofﬁce in September, Kaplan has spent time meeting with business,
banking and community leaders throughout the district. He delivered his ﬁrst
public speech as president at the University of Houston, where he discussed
topics ranging from the impact of low oil prices on the district to the prospects of a
slowdown in economic growth in China.

DISTINCTIVE RESEARCH

As declining oil prices continued to make headlines in 2015, the Dallas Fed played
a leading role in disseminating timely and authoritative analysis on the subject. In
addition to its Quarterly Energy Update, the Bank devoted an issue of Southwest
Economy to the impact of low oil prices on Texas. Several subsequent articles and a
YouTube video provided further analysis.
The Bank's research economists in 2015 authored 24 articles that were published
in peer-reviewed journals and provided 10 chapters in books or conference
volumes. Of particular prominence was the publication of Ten-Gallon Economy:
Sizing Up Economic Growth in Texas by Palgrave MacMillan. Edited by Pia M.
Orrenius, Jesús Cañas and Michael Weiss, the book details the many factors
behind Texas' outsized economic growth and challenges for the future. The book's
publication marked the culmination of a multiyear research project.
The Bank organized seven research events, including the conference "Vistas from
Texas: An Economic Outlook," which featured regional economic updates and an
expert panel on key business sectors of the Eleventh District, and the "10th
Border Economic Forum," which examined the national, local and cross-border
trends that impacted business conditions in the vibrant Paso del Norte region of
El Paso, Texas; Las Cruces, New Mexico; and Ciudad Juárez, Mexico. Other events
included "U.S.–Mexico Manufacturing: Back in the Race," which focused on
changes in the global manufacturing landscape. In addition, the Dallas Fed
sponsored two events as part of the Bank's Globalization and Monetary Policy
Institute speaker series—one featuring economist Lars Christensen and another
with Roger Lowenstein, author of America's Bank: The Epic Struggle to Create the
Federal Reserve.
Another initiative in 2015 focused on increasing public awareness of the Dallas
Fed's Texas Employment Forecast. Starting in August, the Bank began posting the
forecast monthly on DallasFed.org. The forecast provides a valuable resource for
constituents interested in the state's economy.

In addition to the expertise provided by the Bank's research economists, the
Dallas Fed gathers valuable insight from the Bank's boards of directors, advisory
councils and business and community leaders, who provide a grassroots
perspective on the regional economy. This feedback, in turn, helps inform
monetary policy through the Bank's participation in the FOMC.

FINANCIAL SERVICES

The Dallas Fed supplies currency and coin to meet demand. In 2015, the Bank paid
and received 6.5 billion notes, valued at $124 billion, and conducted transactions
with more than 4,000 ﬁnancial institutions and branches.
To help maintain the quality and integrity of currency and coin in circulation, the
Dallas Fed destroys currency no longer ﬁt for circulation. In 2015, the Bank
destroyed about 37 million notes, valued at over $840 million, per month. During
the same period, it detected more than 700 counterfeit bills per month.

ELECTRONIC PAYMENTS

The Federal Reserve provides payments services to ﬁnancial institutions to foster
the integrity, efﬁciency and accessibility of the U.S. payments system. As new
forms of electronic payments have emerged, the Reserve Banks and the Board of
Governors have partnered in the role of convener, bringing the industry together
to work toward consensus on a faster and more secure payments system.
To increase awareness of the advances in payments technologies and their impact
on ﬁnancial institutions, the Dallas Fed has conducted outreach and education
related to the rapidly evolving payments landscape. In 2015, Dallas Fed experts
gave 60 presentations on payments to a variety of banking, business education
and consumer groups. The Bank also gained feedback on payments issues from its
Corporate Payments Council, which is composed of representatives of
corporations headquartered in the Eleventh District.

BANKING SUPERVISION

The Federal Reserve helps ensure a strong, stable banking system for all
Americans through its bank supervision function. The Fed is responsible for the
oversight of U.S. bank holding companies, foreign banking organizations operating
in the U.S. and state-chartered member banks of the Federal Reserve System.
The Dallas Fed has taken a progressive approach to leveraging technology and
revising processes to enhance examination efﬁciency. As more ﬁnancial
institutions store data and documents electronically, collecting the digital data has
become a standard part of performing bank examinations as examiners securely
exchange the electronic ﬁles with the ﬁnancial institution and perform the
analysis in the ofﬁce. As a result, the time and number of examiners required for
an exam have decreased and the disruption to bankers is minimized.
Feedback from bankers in the district has been positive regarding the off-site
examination process.

ECONOMIC EDUCATION

In 2015, the Bank published Navigate: Exploring College and Careers, a free
classroom resource for schools and community-based organizations to guide
seventh- through ninth-grade students in exploring career and college
opportunities. Teacher training sessions were provided for the Dallas, Houston,
Katy, Round Rock, Tyler, Socorro and El Paso school districts in Texas, among
others. The Bank has widely distributed the student workbook as well as a
companion teacher handbook in response to demand for this much-needed tool.
A new interactive version of Building Wealth, the Bank's personal ﬁnancial
education resource, was provided online. The Bank redesigned and modernized
the publication, resulting in an improved user experience that continues to help
the public build personal wealth. The publication received national recognition in
the annual American In-House Design Awards competition for graphic design and
communication projects.
31

COMMUNITY DEVELOPMENT

The Bank released Las Colonias in the 21st Century: Progress Along the Texas–Mexico
Border. The report—which marks the culmination of three years of study—
examines infrastructure, housing, economic opportunity, education and health in
the Texas colonias, communities that may lack some of the most basic living
necessities. The Bank also hosted a conference in McAllen, Texas, launched a
website, and provided numerous presentations on the report.
Universities are now incorporating the colonias report and video into classroom
syllabi. The Dallas Fed was invited to hold a symposium on the topic at the
Woodrow Wilson International Center for Scholars in Washington, D.C.
In keeping with its mission of promoting programs and policies that improve the
ﬁnancial stability of low- and moderate-income households, the Dallas Fed has
assumed the role of convener in an innovative approach that is reducing demand
for high-priced payday lending. Collectively known as the Community Loan
Centers of Texas, this network of small-dollar loan providers enables employers to
offer an alternative to payday and car title loans. In October, the Dallas Fed hosted
a gathering of these providers to highlight the scalability and growth of this
model.
FINANCIAL INSTITUTION OUTREACH

Recognizing the importance of community bankers in promoting a stable, healthy
economy, the Dallas Fed launched an initiative in partnership with the
Independent Bankers Association of Texas and the Texas Bankers Association. The
Banking on the Leaders of Tomorrow (BOLT) program is designed to promote
understanding of the Fed among community banking's future leaders. The ﬁrst
BOLT seminar was held in San Antonio, with speakers that included leaders from
the banking industry and the Dallas Fed, who shared insights on leadership and
the Federal Reserve.

RECRUITING AND EMPLOYMENT

The Dallas Fed is committed to diversity, inclusion and mutual respect in all
aspects of business. This is exempliﬁed in the Bank's partnerships with
organizations to identify and recruit employment candidates in support of its
efforts to maintain a diverse workforce.
In 2015, on behalf of the Federal Reserve System, the Dallas Fed piloted a
diversity career fair with a science, technology, engineering and mathematics
(STEM) focus. Staff met and conducted on-site interviews with candidates from
the technology and engineering ﬁelds. In addition, the Bank participated in more
than 60 career fairs, conferences and engagements, and partnered with
universities and other organizations to identify candidates for job openings.

TREASURY SERVICES

The U.S. Treasury announced its All-Electronic Treasury Initiative in 2010, setting
a 2013 deadline for monthly federal beneﬁt payments such as Social Security
made via check to be converted to an electronic alternative. The effort is expected
to save taxpayers $1 billion over 10 years. On behalf of the Treasury, the Dallas
Fed operates the U.S. Electronic Payment Solution Center, which includes a call
center and website through which people can sign up for direct deposit of their
federal beneﬁt checks. The Dallas Fed continues to support this initiative because
all recipients haven't yet been converted and baby-boomer retirements are
expanding the pool of beneﬁt recipients.
The Dallas Fed's Treasury Services program continued to provide exceptional
support for this initiative, earning the highest possible rating from the Treasury
for its call center and website operations. In 2015, efforts to improve the
customer experience included implementing a more efﬁcient call ﬂow and
introducing speech analytics, which convert spoken conversations to searchable
text. Dallas Treasury Services also coordinates the design and printing of the 1.5
million monthly inserts that are included with federal beneﬁt checks to inform
recipients about the need to enroll in electronic payment.
33

While the operations of the Dallas Fed are complex, its mission is simple: to serve
the interests of the American people. In 2015, the Bank continued to fulﬁll that
mission, providing valuable insight on the district economy, protecting the
stability of the banking system, and helping communities and individuals ﬁnd
solutions to economic problems in a rapidly changing world.

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Examinations of the Reserve
Bank
2015 Financials

Annual Report 2015

The Reserve Banks and the consolidated limited liability
company (LLC) entity are subject to several levels of audit and
review.
The combined ﬁnancial statements of the Reserve Banks as well as the annual
ﬁnancial statements of each of the 12 Banks and the consolidated LLC entity are
audited annually by an independent auditing ﬁrm retained by the Board of
Governors. In addition, the Reserve Banks, including the consolidated LLC entity,
are subject to oversight by the Board of Governors, which performs its own
reviews. The Reserve Banks use the Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) to assess their internal controls over ﬁnancial reporting,
including the safeguarding of assets. Within this framework, the management of
each Reserve Bank annually provides an assertion letter to its board of directors
that conﬁrms adherence to COSO standards.
The Federal Reserve Board engaged KPMG to audit the 2015 combined and
individual ﬁnancial statements of the Reserve Banks and Maiden Lane LLC.1
In 2015, KPMG also conducted audits of internal controls over ﬁnancial reporting
for each of the Reserve Banks. Fees for KPMG services totaled $6.7 million, of
which $0.4 million was for the audit of Maiden Lane LLC. To ensure auditor
35

independence, the Board requires that KPMG be independent in all matters
relating to the audits. Speciﬁcally, KPMG may not perform services for the
Reserve Banks or others that would place it in a position of auditing its own work,
making management decisions on behalf of the Reserve Banks, or in any other
way impairing its audit independence. In 2015, the Bank did not engage KPMG for
any non-audit services.
The Federal Reserve Bank of Dallas’ ﬁnancial statements as of and for the years
ended December 31, 2015 and 2014 and the independent auditors’ report can be
found at the following link:
http://www.federalreserve.gov/monetarypolicy/ﬁles/dallasﬁnstmt2015.pdf.

NOTE
1. In addition, KPMG audited the Ofﬁce of Employee Beneﬁts of the Federal Reserve System (OEB), the
Retirement Plan for Employees of the Federal Reserve System (System Plan), and the Thrift Plan for
Employees of the Federal Reserve System (Thrift Plan). The System Plan and the Thrift Plan provide
retirement beneﬁts to employees of the Board, the Federal Reserve Banks, the OEB and the Consumer
Financial Protection Bureau.

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Senior Management
As of December 31, 2015

Annual Report 2015

Robert S. Kaplan

Helen E. Holcomb

Meredith N. Black

President and CEO

First Vice President and Chief

Senior Vice President

Operating Ofﬁcer

Blake Hastings

Evan F. Koenig

Joanna O. Kolson

Senior Vice President in

Senior Vice President and

Senior Vice President

Charge

Principal Policy Advisor

Harvey R. Mitchell III

Alfreda B. Norman

Daron D. Peschel

Senior Vice President

Senior Vice President in
Charge

Robert L. Triplett III

Mine K. Yücel

Glenda S. Balfantz

Senior Vice President

Senior Vice President and

Vice President and General

Director of Research

Auditor

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Dallas Board
As of December 31, 2015

Annual Report 2015

Renu Khator

Matthew K. Rose

Curtis V. Anastasio

Chair

Deputy Chair

Chancellor
University of Houston System
President
University of Houston
Houston

Executive Chairman
BNSF Railway Co.
Fort Worth

Executive Chairman
GasLog Partners LP
New York

Greg L. Armstrong

Jorge A. Bermudez

Christopher C. Doyle

Chairman and CEO
Plains All American Pipeline LP
Houston

President and CEO
The Byebrook Group LLC
College Station, Texas

President and CEO
Texas First Bank
Texas City, Texas

Allan James "Jimmy"
Rasmussen
President and CEO
HomeTown Bank NA
Galveston, Texas

J. Russell Shannon

Ann B. Stern

President and CEO
National Bank of Andrews
Andrews, Texas

President and CEO
Houston Endowment Inc.
Houston

FEDERAL ADVISORY
COUNCIL

Ralph W. Babb Jr.
Chairman and CEO
Comerica Bank
Dallas

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

El Paso Board
As of December 31, 2015

Annual Report 2015

Renard U. Johnson

J. Eric Evans

Richard D. Folger

Chair

Chair Pro Tem

President and CEO
METI Inc.
El Paso

CEO
Tenet Healthcare Corp.,
Texas Region
Dallas

Managing General Partner
Colbridge Partners Ltd.
Midland, Texas

Paul L. Foster

Teresa O. Molina

Robert Nachtmann

Executive Chairman
Western Reﬁning Inc.
El Paso

President
First New Mexico Bank
Deming, N.M.

Dean of the College of Business
Administration and Professor of
Finance
University of Texas at El Paso
El Paso

Jerry Pacheco
President
Global Perspectives Integrated
Inc.
Santa Teresa, N.M.

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Houston Board
As of December 31, 2015

Annual Report 2015

Ellen Ochoa

Marcus A. Watts

Albert Chao

Chair

Chair Pro Tem

Director
NASA Johnson Space Center
Houston

President
The Friedkin Group
Houston

President and CEO
Westlake Chemical Corp.
Houston

Paul B. Murphy Jr.

Dr. Robert C. Robbins

Gerald B. Smith

President and CEO
Cadence Bank
Houston

President and CEO
Texas Medical Center
Houston

Chairman and CEO
Smith, Graham & Co. Investment
Advisors LP
Houston

R.A. "Al" Walker
Chairman, President and CEO
Anadarko Petroleum Corp.
The Woodlands, Texas

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

San Antonio Board
As of December 31, 2015

Annual Report 2015

Catherine M. Burzik

Manoj Saxena

Janie Barrera

Chair

Chair Pro Tem

President and CEO
CFB Interests LLC
San Antonio

Managing Director
The Entrepreneurs’ Fund
Austin

President and CEO
LiftFund
San Antonio

Alfred B. "Al" Jones

Robert L. Lozano

James "Rad" Weaver

Chairman and CEO
American Bank
Corpus Christi, Texas

Franchisee Owner and Operator
Dairy Queen
Pharr, Texas

CEO
McCombs Partners
San Antonio

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Oﬃcers/Senior Staff
As of December 31, 2015

Annual Report 2015

DALLAS

Robert S. Kaplan

Helen E. Holcomb

President and CEO

First Vice President and
Chief Operating Ofﬁcer

Meredith N. Black

Evan F. Koenig

Joanna O. Kolson

Senior Vice President

Senior Vice President and
Principal Policy Advisor

Senior Vice President

Harvey R. Mitchell III

Alfreda B. Norman

Robert L. Triplett III

Senior Vice President

Mine K. Yücel
Senior Vice President and
Director of Research

Tommy E. Alsbrooks

Glenda S. Balfantz

Bobby E. Coberly Jr.

Vice President

Vice President and General
Auditor

Vice President

Diane M. de St.
Germain

John V. Duca

Paul T. Elzner

Vice President and Associate
Director of Research

Vice President

Robert G. Feil

Sherry Kidd Garvin

KaSandra Goulding

Vice President and Associate
Secretary

Vice President

Kathy K. Johnsrud

Rob Jolley

Richard J. Mase Jr.

Vice President

Dana S. Merritt

Robert R. Moore

Pia M. Orrenius

Vice President and OMWI
Director

Vice President

Sharon A. Sweeney

Michael N. Turner

Mark A. Wynne

Vice President, Deputy General
Counsel and Associate Secretary

Vice President

Vice President, Associate
Director of Research and
Director of the Globalization and
Monetary Policy Institute

Hazel W. Adams

Dex Beyene

Stephan D. Booker

Assistant Vice President

Matthew C. Davies

Claude H. Davis

Jeffrey L. Garrett

Assistant Vice President

Vice President and Regional
Sales Manager

D. Kay Gribbin

Barbara R. Hendrix

Mario Hernandez

Assistant Vice President

James R. Hoard

Michael D. Johnson

Laurel S. Neustadter

Assistant Vice President

Vincent G. Pacheco

Jane L. Pyke

Allen E. Qualman

Assistant Vice President

Rita Riley

Gary A. Scott

William W. Shaffer Jr.

Assistant Vice President

Shareef Shaik

Thomas F. Siems

Jay Sudderth

Assistant Vice President

Trisna Y. Tan

Bridget K. Aman

Jesse Barrientes

Assistant Vice President

Information Security Ofﬁcer

Examining Ofﬁcer

Mark J. Hillyer

Michael A. "Ike" Ikner

Roy C. Lopez

Financial Management Ofﬁcer

Operations Ofﬁcer and Chief of
Police

Community Development
Ofﬁcer

Robert F. Mahalik

Amy J. McGregor

Anthony Murphy

Examining Ofﬁcer

Shared Support Services Ofﬁcer

Economic Policy Advisor and
Senior Economist

Marcus A. Propps
Operations Ofﬁcer

EL PASO

Roberto A. Coronado

Javier R. Jimenez

Assistant Vice President in
Charge

Assistant Vice President

HOUSTON

Daron D. Peschel

Donald N. Bowers II

Jason K. Ritchie

Senior Vice President in Charge

Vice President

Assistant Vice President

Michelle D. Treviño

Paul R. Wheeler

Assistant Vice President

SAN ANTONIO

Blake Hastings

Tara F. Payne

Keith R. Phillips

Senior Vice President in Charge

Assistant Vice President

Lawrence B. Schiff
Assistant Vice President

AFTER THE BOOM
Texas Economy Downshifts in Energy Bust | Annual Report 2015

Acknowledgments
Mine Yücel

Pia M. Orrenius

Keith R. Phillips

Senior Vice President and
Director of Research

Vice President and Senior
Economist

Assistant Vice President and
Senior Economist

James R. Hoard

Carol Dirks

Michael Weiss

Assistant Vice President

Director of Digital and Print
Communications

Editor

Anne Coursey

Kathy Thacker

Dianne Tunnell

Digital Communications
Manager

Associate Editor

Olumide Eseyin

Alex Johnson

Jennifer Chamberlain

Art Director and Web Designer

Corporate Communications
Manager

Communications Specialist

Gene Autry

Ellah Piña

Photographer

Chart Producer

Full text of Annual Report of the Federal Reserve Bank of Dallas : Annual Report, 2015 : After the Boom: Texas Economy Downshifts in Energy Bust

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