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Business Review - February 1974 The Energy CrisisOutlook for Petroleum In the Southwest Mixed This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) The Energy Crisis- Outlook for Petroleum In the Southwest Mixed r:r:he energy crisis could be espeRally significant to states of the leventh District. Users in these Southwestern states have long be.en accustomed to plentiful supPli.es of oil and gas that sold at prIces considerably less than in the nation as a whole. Moreover, a h~avy portion of the region's industlllal base is directly tied to oil and gas production. .Now, with imports sharply curtailed and the outlook for domestic pr.oduction to increase only to a ~hlUor. degree relative to demand, ere IS a sudden awareness that ~?ortages and distribution disrup. IOns may occur at least temporarIly and that users in the Southwest will have to begin paying more for energy. The region's industrial future is bound to be affected. Many industries will face problems. And there could be problems ~or some segments of the petroleum Industry itself. Refinery runs, for example, have been sharply cut in response to the drop in imports of ~rude oil. Crude buyers in produc~ng states of the Southwest report rouble finding enough domestic crud.e to keep refineries going. Im~edlate prospects for increasing e domestic supply of crude oil re dim. Demand for crude has een rising at least 6 percent a ~ear, and production in Texas lds, for example, has been falling out 3 percent a year. lil ~s reserves dwindle, it is less C{e y that the Texas Railroad °mmission will relax some of its c~nservation requirements in an ~ ort to boost production. On the s~ntrary, some of the commission's r aff sees preservation of the state's eserves as more crucial than ever. b ab n Usiness R eVlew . / February 1974 Since, under Texas law, the commission is viewed primarily as a conservation agency, it may have no choice but to insist that reserves be stretched out as long as possible. With fuel prices rising, the outlook is for renewed efforts to discover and develop new reserves. And higher fuel prices will mean more income in the Eleventh District from oil and gas production. Both aspects of the change brighten prospects in the Southwest. Also, with more wells being drilled, there should be a sustained boom for the oil field equipment and supply industries that abound in southwestern states. Coupled to the District's oil and gas production, however, are large concentrations of industries based on cheap energy and the ready availability of petroleum feedstocks. As oil and gas prices rise, these industries face possible setbacks that could take years to overcome. The outlook for petrochemicals is especially uncertain. Just how important any setback in processing could be for District industry is suggested by the assignment of weights to the Texas industrial production index prepared by the Federal Reserve Bank of Dallas. About half the weight used in compiling this index is assigned to the petroleum producing and processing industries. Of that, close to half-about 20 percent of the total-is assigned to processing. here and abroad. One important factor, however, has been the absence of any unified energy policy in this country until recently. But several public policies, all independently arrived at, combined to bring about the same effect-to provide an abundance of comparatively inexpensive fuel. Under such an unstated but, nevertheless, national policy, producers and consumers benefited in the beginning. After huge new petroleum reserves were found overseas in the 1950's, a quota system was imposed on imports to prevent a possibly massive inflow of low-priced crude from abroad. Unlike most protective policies, the system was devised to promote national security, recognizing that an unchecked flow of cheap foreign oil would create a dependence on imports that might not always be available. This system, along with the prorationing system devised by producing states, accounted for the spare capacity in the Southwest. Because of their enormous reserves, the District states had already prorationed production to stabilize markets and, thereby, avoid wasteful pumping. As demand for energy rose, the rise in domestic prices was held back by increasing state production allocations and by allowing more foreign oil into the country. Americans had not merely stable oil prices but, in constant dollars, gradually declining prices. Source of shortage The abundance of oil was reinforced by enormous reserves in the The loss of spare capacity that brought such significant changes in natural gas market. Until pipelines were laid nationwide, there was no the outlook for the petroleum inneed to encourage exploration for dustry in the Southwest was due natural gas. And even long after to a number of developments both 1 Developments in oil production impacted similarly on the Southwest. The self-imposed restraints on output postponed income into the future, making it harder for producers to finance their operations. As regulation of natural gas prices curtailed exploration, so eventually did prorationing of oil production. Moreover, drilling costs rose. Producers were caught in a costprice bind that finally brought a decline in the Southwest's multimillion-dollar exploration industry. gripped consumers has been due to developments that have been building for many years. The nation's energy requirements have doubled since 1950. And until the recent cut in imports, they were expected to double again by 1985. But domestic energy supplies have become tight with the loss of spare capacity for the production of petroleum. Most of this capacity has been in southwestern states. These states have long dominated domestic oil and gas production, as they are apt to do for years to come. Petroleum in the Southwest Excluding undeveloped reserves The immediate problem is due, of in Alaska, they account for some course, to the interruption of im73 percent of the nation's proved ports from the Middle East. But crude oil reserves and about 85 perthe growing sense of crisis that has cent of its natural gas reserves. Only Alaska is in a class with the Southwest as a potential producer of petroleum. Although enormous reserves have been discovNatural gas reserves in Texas decline, ered on its North Slope, it will still limiting further increases in production be years before Alaska can bring these reserves into production. And TRILLION CUBIC FEET 130------------------------------_____________________ even then, it will be hard to transport Alaskan oil to the Atlantic Seaboard, now served mainly by 120states in the Eleventh District. Of the five District states, only Arizona is not a major producer of 110 petroleum. Texas and Louisiana are the nation's leading producer states. Texas alone produces more 100than a third of all domestic oil and gas. Of the record $8 billion in min90erals produced in this state in 1973, -:::some 93 percent was petroleum. In 9Louisiana, where petroleum accounted for a similarly high pro8portion of the output, mineral production reached well over $5 billion that year. Oklahoma is the 7 - _-------....-PRODUCTION fourth most important producer state, and New Mexico is sixth. Without dramatic new discover6 I I I I I ies-possibly offshore-production ill I I 1966 1967 1968 1969 1970 1971 1972 these states is probably close to its SOURCE: American Gas Association crest, however. Even with an increase in exploration, production in the Southwest is expected to pipelines opened a national market for gas and demand soared, little effort was made to find new gas because of the abundance of gas reserves discovered earlier in the search for oil in the District. This backlog of reserves helped further in keeping energy prices low. Regulation of natural gas developed independently of policies governing crude production. But the aim was the same-to keep energy prices down. As demand for natural gas rose, controls were imposed to regulate the price of gas sold interstate. And as regulation of gas prices took its place in a national policy, artificially low gas prices contributed to a slackening in exploration, and natural gas supplies tightened. ~ 2 With decline in exploration , nUmber of producing oil wells falls THOU SAN D WELLS 600 --______________________________________________ ___ 55 0 PRODUCING WELLS IN UNITED STATES 500 - 45 0 ~ 60- r 20 Iii 1950 j I iii iii iii 1955 1960 1965 1970 SOU RCE: World Oi l -dhcline in the years immediately a ead. In Texas, for example, the W of oil is expected to drop from ~ out 3.5 million barrels a day in ?72 to 2.5 million in 1985 without SIgnificant new discoveries. '1' 'l'he output of natural gas in we){as has already reached a point here it is backed by reserves that 1:?uld .last only about ten years. l' ~~t IS the reserve-to-production ~ 10 generally believed the mini1i\1u~ needed for year-round deh eries. And as the reserve base bas d~clined, there have already 'l'een Interruptions in deliveries of e){as gas. With recent increases in oil and gasp' rIces-and probably more to nus'!ness Review / February 1974 fib come-the value of production in the Southwest will very likely hold up for many years, protecting the region's economy from any marked declines in oil-based revenues. Meanwhile, higher prices have spurred drilling. Nationwide, 5.6 percent more wells were drilled in 1972 than in 1971. Much of this increase was in the Southwest. In Texas alone, 8.5 percent more wells were drilled and 5.4 percent more wildcat wells were sunk in search of new reserves. While this increase still leaves the number of wells drilled far short of the peak reached in the midfifties, it marks a decided turnaround from the downtrend of the past decade. By 1971, the number of wells drilled in the United States had dropped to the lowest level in the post-World War II period. Although any further increases in drilling could be limited by other factors-such as the availability of risk capital and capable oil field workers-the availability of equipment is also a constraint. And this constraint, in itself, helps improve the outlook for business activity in the Eleventh District, especially in Texas. A major producer of oil field equipment, Texas built oil field machinery valued at $606.5 million in 1971. Construction of offshore rigs has been going full tilt in Texas for some time, and there are enough backorders to keep Texas yards busy for years. Altogether, some 25 offshore rigs and drilling ships are under construction in Texas and Louisiana. With the upturn in onshore drilling, construction of land rigs has also increased. Closely connected to the production of petroleum in the Southwest is the nation's heaviest concentration of refineries and petrochemical plants. Prospects for the region's petroleum processing industries are-for the long runtotally different from the outlook for its oil and gas production. If long-run supplies of feedstocks tighten, growth of these industries is clearly threatened. Refineries and petrochemical plants are important enough to the economy of the Southwest that any slowing in the growth of petroleum processing could have a significant impact on the region and the nation. Fully 40 percent of both the nation's refining capacity and its petrochemical capacity is along the coast of Texas and Louisiana-producing, for example, 80 percent of the country's synthetic rubber. In Texas alone, more than 100,000 workers were employed in petroleum processing plants in 3 the Southwest. On the positive side, continued demand for petroleum products provides the most 1967=100 persuasive contention that the out140 look for the processing industries is still bright. With fuel supplies tight, refineries had been operating close to 130 capacity when the Arabs put an embargo on crude from the Middle East. Thus, even when Middle Eastern oil is available again, more 120 refineries will have to be built. Refiners budgeted nearly $1.2 billion on capital equipment in 110 1973, and more may be spent this year, much of it in the Southwest. Producers of chemicals and allied products budgeted close to $4.3 100~~--"~~------.--------r-------'--------,-billion on capital equipment in 1973 before the Arab embargo, and 1967 1971 1972 1970 1968 1969 they were expected to invest a silnilar amount in 1974. This includes ... and stayed below other wholesale prices large sums for pollution abatement. 1967=100 With petroleum reserves declin130 ing in the Southwest and processing plants becoming increasingly dependent on imports for feedstocks, it might be expected that 120 most of this future construction would be closer to principal markets-as, for example, in the N ortheast. Concern over the environment 110 in such areas continues, howeverdespite the energy crisis. This concern has prevented construction of refineries and petrochemical plants 100~"~;;~~----~------------'-----------r--------~and of the superports needed to 1967 1968 1971 1969 1972 1970 accommodate tankers large enough SOURCE: Independent Petroleum Association of America to help offset some of the rising cost of imports. There is a very good chance of a superport being built near New Orleans. And indications are that 1972. Payrolls of these plants tocent of the value added by manuthe next of these new facilities will taled about $1 billion that year. facturing in the state that year. most likely be built in Texas. HouSProducts of Texas refineries were More than 61,000 workers were ton and Galveston want to build worth $7.3 billion in 1971. That employed in Texas chemical plants superports, and other Texas Gulf represented more than $1.5 billion in 1973. Coast ports would also like to have in value added by refineries-or facilities to receive supertankers. some 10 percent of the value added Outlook for processing ... Were such superports to be built by all the state's manufacturing There are both positive and negain the District, prospects for the plants. Chemicals and allied prodtive factors at work shaping prosregion's refining expansion would ucts accounted for about 20 perpects for petroleum processing in be boosted. Crude prices in the past increased less than drilling costs . .. 4 Much of the addition to refining capacity so far has come through the expansion and modernization of existing plants. And as the Texas and Louisiana Gulf Coast already has more refineries than any other region, the Southwest is likely to Continue to see this type of construction. Texas, for example, has 40 big oil refineries. Together, they can process some 3.5 million barrels of crude a day, accounting for rOUghly a fourth of the nation's refining capacity. All these factors favoring plant expansion in the Southwest relate primarily to refineries and their dependence on crude oil. But without a basic change in inputs to petrochemical production in this country, the declining availability of ~atural gas in the Southwest could amper growth in the region's petrochemical industry. liquids. In recent years, it has consumed about a third of the natural gas liquids produced in this country and about half the natural gas used by all industries. But as regulation continued to hold down prices-even after reserves became less plentiful-no effort was made to discourage use of natural gas. And without price increases, there was little incentive for further exploration. The result was a steady deterioration in reserves and, eventually, in the supply of natural gas. Now, gas prices are up sharply. To get the fuel and feedstock they need to expand operations, petro- ... may not be bright Petrochemical plants in the Elev~nth District were built originally o make use of the byproducts of petroleum refining. But very early In the development of the petrochemical industry, plants in Texas ar d Louisiana began making use o the cheap gas and gas byprod~cts available from fields nearby. p s a result, they have long been det endent largely on cheap gas and \V~~hg~tseous liquids produced along BILLION BARRELS chemical plants not only have to pay much higher prices, they must also face the possibility of other users bidding away their supplies. Most petrochemical companies have been protected from increases in gas prices by long-term contracts that give them comparatively lowpriced gas. But companies that respond to the rise in demand for petrochemicals by expanding their facilities-and, therefore, have to negotiate for additional gas supplies-could be caught in a pinch between the prices they have to pay for more inputs and the prices markets will bear for their output. New contracts for natural gas call Production exceeds additions to U.S . crude reserves, despite dramatic discoveries in Alaska 40-------------------------------------------------PROVED RESERVES 35- 1 • \V With gas reserves in the South- rnest so much larger than the de'l' ands on them, prices were low. dihey Were low enough, in fact, for thsthnt residential markets to bear A e eavy costs of transmission. thn~as-consUming plants along the U~f Coast came to dominate e natIOn's chemical industry , b00 t· leaJ lUg.t~e United States to world I ershlp III petrochemicals. Pet n the process, however, the nat~Ochemical industry became the lIs lOn's largest single industrial er of natural gas and natural gas nUs'Uless Review / February 1974 NEW RESERVES 10- 5- ~ ~- ....CRUDE OIL PRODUCTION O~I-,,~Ir-rl~I~I-,,~Ir-rl~I~I-,~I..-rl~~I-,~r-r-~~I-,--r- 1950 1955 1960 1965 1970 SOURCE : American Petroleum Institute 5 for prices 3 or 3 ~ times more than just a few years ago. Prices of natural gas liquids are also up sharply. Even companies with contracts that provide favorably priced inputs face the risk of interruptions in the flow of gas. The possibility that the Government might begin allocating gas to industry during periods of peak demand makes the availability of gas as a feedstock uncertain, adding to the risks companies must take in expanding their petrochemical plants. Because these plants are so expensive to build, they must be operated continuously to spread out their high fixed overhead. Nor can the industry escape the gas shortage by drawing more heavily on natural gas liquids. With gas becoming scarce, changes in regulatory policies are also all0wing prices of gas liquids to rise. And the industry faces new competition for the supplies that are available. Synthetic gas producers and even some utility companies that once dealt primarily in natural gas have become interested.in b~ying gas liquids to convert into gas that can be sold directly to end-users as fuel. If such interest continues, these companies could help bid up prices still further, putting these hydrocarbons beyond the reach of petrochemical producers. Imports hold out few possibilities. Natural gas can be transported from overseas only as a supercooled liquid-which makes it too expensive-for uses other than in meeting peak fuel demand and possibly home consumption. 6 prices rise, abundant alternatives in coal and shale oil. With the change in the nation's energy supply situation, policies have changed. Steps were being taken, even before the current crisis, to encourage the search for neW reserves. Prices of gas sold interstate were allowed to rise. Import policies and spare capacity combined to hold back rises in oil prices for a while, as later did price controls. But now, domestic crude prices have been allowed to rise. For domestic supplies to hold imports to a level the country can afford, wellhead prices will probably have to continue rising sharply over the next few years. With the Arab embargo and the jarring increases in world crude prices, domestic prices have already reached levels thought impossible just a few months ago. These recent rapid changes will have a decided effect on states of the Southwest. Such sharply rising prices will go far not only in offsetting the effects of gradually declining production but also in extending production by stimulating recovery efforts and exploratioJl for new fields. But prospects for higher oil and gas prices do nothing to improve the outlook for the region's petroImportance of prices chemical industry. Based on inexWith the rapid increases in demand pensive gas and gas bypro ducts, for energy and the falloff in drillthis industry does not have the ing, problems were bound to depossibilities for relief that can be velop in time. Many geologists beheld out to refineries. And lack of lieve there are still large amounts growth in petrochemicals could of oil and gas reserves to be found be important to the nation as a in the United States and, as fuel whole. For one thing, petrochemi- New plants could be based on feedstocks from crude refining. Plants in Europe make extensive use of refinery products. But because oil refineries in this country were built for a different output mix, use of feedstocks derived from crude would require extensive modification of both refineries and petrochemical plants. The changeover would be enormously expensive and could be accomplished only over several years. The shortage of natural gas is also threatening to boost another important cost of plant operations, further undermining the locational advantages of the chemical industryon the Gulf Coast. The chemical industry consumes large amounts of energy. About 40 percent of the electricity used by Texas industry, for example, is consumed at chemical plants. And most of this comes from generating plants burning natural gas. With the cost of gas as a boiler fuel going up, power companies in Texas are planning to make more use of other fuels, such as lignite, and to switch to nuclear generating plants. Either move, however, will make electricity more expensive than users have been accustomed to in the Southwest. ?als are basic inputs to almost all Industries. For another, petrochemicals have been a source of strength to the nation's balance of payments. This country is the world's largest chemical producer. Its exports of chemicals for 1973 were at more than twice the value of its chemical imports-over $5.6 billion, comPared with imports of about $2.4 billion. The U.S. share of world exports has been declining, however, and the surplus in chemical trade could be endangered. Much of this trade advantage has been due to superior technolOgy. But much of it has also been d.ue to the availability of inexpenSIVe energy and feedstocks. As these cost advantages slip, technical Superiority becomes less important-and even this advantage could be lost. With plenty of money for investlllent in plants and an overabundance of cheap oil and gas, producer countries in North Africa and the Middle East could become formidable competitors in chemicals. Saudi Arabia, for example, b~uany flares about 3.5 trillion cu. IC feet of natural gas a year. That IS rOughly 16 percent of total U.S. consumption. And in the Middle East, oil generally costs no more than 20 cents a barrel to produce. Some production costs are reputed to run as little as 5 cents. Countries with such cheap feedstocks . could undersell any other chemical Producer in the world. -Stephen L. Gardner l!usiness Review / February 1974 7 New member banks The Dallas/Fort Worth Airport National Bank, Irving, Texas, a newly organized institution located in the territory served by the Head Office of the Federal Reserve Bank of Dallas, opened for business January 3, 1974, as a member of the Federal Reserve System. The new member bank opened with capital of $500,000, surplus of $500,000, and undivided profits of $250,000. The officers are: Ronald G. Steinhart, Chairman of the Board; A. E. "AI" Goode, President; Jon J. Collins, Assistant Vice President; and Jerry W. Corley, Cashier. The Kingwood Commerce Bank, N. A., Humble, Texas, a newly organized institution located in the territory served by the Houston Branch of the Federal Reserve Bank of Dallas, opened for business January 7, 1974, as a member of the Federal Reserve System. The new member bank opened with capital of $400,000, surplus of $400,000, and undivided profits of $200,000. The officers are: William S. Pebworth, Jr., Chairman of the Board; Terry Tuggle, President; and Robert A. Thompson, Vice President and Cashier. New par banks The Addison State Bank, Addison, Texas, an insured nonmember bank located in the territory served by the Head Office of the Federal Reserve Bank of Dallas, was added to the Par List on its opening date, January 2, 1974. The officers are: William F. Stevens, President, and Mrs. Sue Coleman, Cashier. The Forest Hill State Bank, Forest Hill, Texas, an insured nonmember bank located in the territory served by the Head Office of the Federal Reserve Bank of Dallas, was added to the Par List on its opening date, January 7, 1974. The officers are: Michael C. Stinson, President, and Robert R. Cleveland, Vice President and Cashier. The New Ulm State Bank, New Ulm, Texas, an insured nonmember bank located in the territory served by the Houston Branch of the Federal Reserve Bank of Dallas, was added to the Par List on January 7, 1974. The officers are: Winston B. Harris, Chairman of the Board and President; Lew Ellyn Gross, Executive Vice President; Charles W. Mewis, Executive Vice President; Gilbert Glaeser, Vice President; Mrs. Violet Buechmann, Assistant Vice President; Jack Schultz Cashier; and Mrs. Beatrice Rinn, Assistant Cashier. ' The Bank of Vernon, Vernon, Texas, an insured nonmember bank located in the territory served by the Head Office of the Federal Reserve Bank of Dallas was added to the Par List on its opening date, January 21, 1974. The officers ~re: J. W. Munson, President, and Brian Hooper, Vice President and Cashier. 8 Federal Reserve Bank of Dallas February 1974 Statistical Supplement to the Business Review - Total credit at weekly reporting banks in the Eleventh District rose iOderately in the five weeks ended anuary 23, reflecting greater than usual increases in both total loans ~nd investments. With a decline in otal deposits the growth in bank c1'edi t Was financed ' mainly by sizable net purchases of Federal funds. . Although real estate loans rose ~gnificantly, most ofthe gain re.ected the reclassification of some ~lzable loans by one large District ank that shifted funds out of comlllercial and industrial loans in to . ~~al estate loans. After adjustment 1 l' the reclassification, real estate Dans still rose slightly more than ~:~al, probably because rising inin tones of unsold homes may have of~e~sed interim financing needs uilders. Cl'Adjusted business loans still dethned contraseasonally, reflecting he slowdown in economic activity. <V1 01'eo . by vel~, mventory accumulation b lllany mdustries apparently has f eef restricted due to shortages of s~~ tnaterials, and parts. Conbl y cer loans were also weak, probaba k urbed by employment cuts and the slowdown in econo. lc activity n/ se~n .balan~e, banks added to their ~eeklty holdings over the five erntns . AI.though holdings of GovhOldi ent ls~ues l'.o~e less tha!1.usual, incr ngs of mumclpal secuntles .eased th ell' f . more than usual . With t au'ly high rate of return and aX-ex CU1'it. etnpt status, municipal set1'act~es ~ave been an especially atT lYe Investment. tely ot~l deposits declined moderain d' wlth an especially shal'p drop typ:~and deposits. Every major COl'Qtne ~~posltor except foreign draw llclal banks made net witha s from their checking ac- counts. Time and savings deposits rose markedly, however, mainly reflecting a sizable increase in the volume of large CD's outstanding. District banks moderately reduced their borrowings in the Eurodollar and commercial paper markets. The seasonally adjusted Texas industrial production index fell about 2 percent in December, the second consecutive month of decline. The petroleum industry remained the major contributor to the reduced output. Crude petroleum mining fell almost 3 percent, and petroleum refining was down 10 percent due to shortages of crude oil and widespread shutdowns for maintenance and repall'. In contrast with the November decline, the drop in industrial activity was not confined to petroleumrelated industries, and total manufacturing decreased faster than a month before. After growing at progressively slower rates the previous two months, durable goods manufacturing-the most sensitive cyclical component of the index-fell for the first month since JUly . Seasonally adjusted total employment in the five southwestern states was vU'tually unchanged in December. This followed only a slight increase in the previous month and was the first month since June that employment failed to grow. Total unemployment was up nearly 5 percent, and the unemployment rate rose to 3.9 percent from 3.7 percent a month earlier. Seasonally adjusted depal'tment store sales in the Eleventh District increased 4.5 percent from midDecember to mid-Janual'y, the thll'd consecutive four-week gain. The rate of increase represented the largest monthly advance since department store sales turned upward in mid-October. Seasonally adjusted new Cal' registrations in the four largest metropolitan counties of Texas-Bexal', Dallas, Harris, and Tarrant-declined 1.4 percent in December. New car registrations have fallen in three of the past four months. The rate of decrease in December, however, was slower than in other recent months, and the drop in new Cal' sales in Texas was less severe than the national decline. Registrations were off 15.6 percent in Tarrant County (Fort Worth), 6.6 percent in Bexar County (San Antonio), and 1.4 percent in Dallas County. Registrations were up 7.2 percent in Hal'ris County (Houston). Cumulative registrations for 1973 were 8.3 percent greater than in 1972, reflecting strong sales early in the yeal'. Texas oil production in the last four months of 1973 was 4 million barrels less than in the same period in 1972, even though allow abIes continued at full effective production. Despite the loss in production, revenues increased as the price of crude oil rose. The state, for example, collected $8 million more in taxes on oil production during this period than in the last four months of 1972. Cold weather in December and January slowed agricultural activities in states of the Eleventh District. Freezing temperatures damaged tender vegetables in Arizona and Texas, causing heavy losses to tomatoes and peppers. Citrus crops, however, received light damage. (Continued on back page) CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS Eleventh Federal Reserve District ., (Thousand dollars) ASSETS Jan. 23. 1974 Dec. 19, 1973 Jan . 24, 1973 1,760,991 9,851,187 1,722,914 9,807,100 1,016,549 8,772,762 4,332,751 4,388,114 3,886,326 298,396 298,511 245,389 473 49,927 473 51,521 1,329 79,371 4,638 450,758 4,474 463,907 7,119 504,608 159,460 746,390 1,441 ,723 32,078 54,222 1,051 ,699 151,768 714,758 1,389,793 33,951 53,470 1,054,133 137,275 685,990 1,226,186 21,579 13,799 966,303 20 1,228,652 4,100,713 20 1,202,207 3,998,927 0 997,488 4,077,891 966,458 128,391 0 950,182 130,414 0 1,096,331 262,634 0 145,486 522,678 169,903 142,641 516,911 160,216 174,104 461,349 198,244 125,255 2,724,948 155,839 2,615,492 258,203 2,437,059 22,699 261,353 1,486,679 1,247,878 132,574 518,914 13,700 18,484 258,930 1,609,807 1,123,376 134,532 463,113 13,682 13,603 272,695 1,453,649 912,442 116,415 387,693 14,944 824,058 854,303 682,089 LIABILITIES Total deposits Federal funds sold and securities purchased under ag re ements to resell ....... Other loans and dlscounls, gross Commercial and Industrial loans ... Agricultural loans, excluding CCC certificates of interest ................. Loans to brokers and dealers for purchasing or carrying: U.S. Government securities Olher securities .......... ...... . " ....... Other loans for purchasing or carrying: U.S. Government securities ... Olher securities ......................................... Loans to nonbank financial Institutions: Sales fin ance, personal finance, factors, and other business credit companies . Other ....... Real estate loans ................................. Loans to domestic commercial banks Loans to foreign banks . Consumer Instalment loans ................ Loans to forelgh governments, official institutions, central banks, and International Institutions . Other loans .......... Total Investments . Total U.S . Government securities .. Treasury bills .................................... .... Treasury certificates of Indebtedness .. Treasury notes and U.S . Government bonds maturing: Within 1 year .. 1 year to 5 years .. After 5 years .................................................. Obligations of states and political subdivisions: Tax warrants and short-term notes and bills . All other ............................................................ Other bonds, corporate stocks, and securillas: Certificates representing participations In federal agency loans . ..... .. All other (Including corporate stocks) Cash items In process of collection ... Reserves with Federal Reserve Bank .... Currency and coin ............ ,. ......................... Balances with banks In the United States . Balances with banks In foreign countries ................ Other assets (Including Investments In subsidiaries not consolidated) .. TOTAL LIAB ILITIES , RESERVES. AND CAPITAL ACCOUNTS ......................... ---- Item Dec. 26, 1973 Nov. 28, 1973 Dec . 27, 1972 ASSETS Loans and discounts, gross . U.S . Governm ent obligations Other securltlas .. ...... ..... ..... ............. ... Reserves with Federal Resarve Bank ., .. ,", ........ ... Cash In vault ................................................. Balances with banks In the United States . Balances with banks In foreign countrlese . Cash Items In process of collection . Other assalse ................................................ 20,185 2,247 6,182 1,718 371 1,584 16 2,057 1,667 19,461 2,239 6,130 1,571 377 1,376 16 1,704 1,608 17,475 2,439 5,548 1,449 358 1,550 14 1,973 1,356 TOTAL LIABILITIES AND CAPITAL ACCOUNTse . e-Estimated 13,340~ 7,293,081 5,208,000 371,633 234,117 1,305,228 7,106, 25 4,213 58,195 106,379 7,222,531 5,916 53,300 114,887 6,989,857 3815 39:864 116,281 6,233,79 1 1,150,360 4,021,572 1,905,925 20,105 99,373 1,145,466 3,867,451 1,835,545 7,991 99,942 1 ,199,0~l 3,220,0 1,665,1 29 25,5 60 1 111 ,72 25,176 20 23,616 320 11,1 00 1,120 3,504,728 272,203 506,313 180,943 24,133 1,258,599 3,300,638 174,965 526,725 168,962 14,614 1,258,912 19,936,694 --- 1 4,960,0~6 525,7 248,4 91 1,211,95 1 2,195,8~ 109,7 457,568 158,670 17.7656 1,1 54,7 2 ---- ~ 19,727,754 g ,43~ ---- (Dollar amounts in thousands) Demanddep~ Roswell 2 ,. (Million dollars) ......... 14,282,938 6,967,244 5,007,405 370,402 157,700 1,262,950 ANN UAL BAN K DEBITS AND AN NU AL RATE OF TURNOVER OF DEMAND DEPOSITS ARIZONA Tucson .... LOUISIANA Monroe Shreveport NEW MEXICO Eleventh Federal Reserve District Total deposits .. . Borrowings ........ ..... ............ ............. ........ " Other lIabllltiese .................... .................... Total capital accountse 14,189,775 ---- 19,727,754 17,434,434 CONDITION STATI STICS OF ALL MEMBER BANKS TOTAL ASSETse Jan . 24, 1973 ------ Standard metropolitan statistical area LIABILITIES AND CAPITAL ACCOUNTS Demand deposits of banks .. Other demand deposits Time deposits .. ....... ,,, ......... , Dec. 19, 1973 ,." 19,936,694 TOTAL ASSETS .. Total demand deposits ........................................ Individuals, partnerships, and corporations .. States and political subdivisions .. U.S. Government ............... Banks In the United States Foreign: Governments, official institutions, central banks, and International Institutions . Commercial banks ........................ " ............. Certified and officers' checks, ate. Total tim e and savings deposits ......................... Individuals, partnerships, and corporations: Savings deposits ......... , ............ Olher time deposits ................. Slates and political subdivisions ....................... U.S. Government (Including postal savings) .... Banks In the United Siaies ............................ Foreign: Governments, offlclallnstilutions, central banks, and International Institutions . Commercial banks ................................. Federal funds purchased and securities sold under agreaments to repurchase . Other lIabllllles for borrowed money Other lIabllllies ............... " ......... Reserves on loans Reserves on securities ................. ", Total capital accounts . Jan. 23, 1974 36,027 34,482 32,162 --- --- --- 1,808 12,451 14,198 1,645 11,844 14,074 1,872 12,088 12,337 28,457 3,737 1,383 2,450 27,563 3,136 1,384 2,399 26,297 2,610 1,046 2,209 36,027 34,482 32,162 TEXAS Abilene .. Amarillo Austin ........................... . Beaumont-Port ArthurOrange .................... .. Brownsvilie-HariingenSan Benito .............. .. Bryan-College Station .. Corpus Christi Corsicana' .. Dallas ...... EI Paso .. Fort Worth .. .. .............. .. Galveston-Texas City . Houston .................. .. Killeen-Temple . Laredo Lubbock ............ . McAlien-PharrEdinburg Midland . Odessa ...... San Angelo San Antonio .......... Sherman-Denison Texarkana (T exasArkansas) ... Tyler ......................... Waco Wichita Falls . Debits to demand deposit accounts' Annual rale ofturnov~ 1973 1972 Percent Increase 1973 1~ $13,381,000 $9,741,062 37% 39.2 31.9 4,812,724 16,499,732 4,028,301 13,678,905 19 21 40.6 50.9 36. 5 46. 1 1,193,436 980,742 22 24.1 22. 5 21. 9 40.8 30.2 3,213,275 10,000,952 14,963,397 2,604,703 7,817,733 12,656, 101 23 28 18 22.9 44.8 32.6 8,316,362 6,939,177 20 28.9 3,050,114 1,547, 002 8,589,377 654,409 197,574,811 11,445,076 33,014 ,836 3,648,538 169,172,326 2,453,546 1,491 ,476 8,056,031 2,498,315 1,318,613 7,441,802 520,401 152,822,521 9,649,372 28,917,336 3,158,256 139,541.680 1,960,531 1,168,892 5,513,042 22 17 15 26 29 19 14 16 21 25 28 46 25.7 26.7 29.8 16.1 67.0 36.2 38.5 28.0 50.3 20.9 24.4 36.2 3,312,284 2,681,734 2,283,072 2,087,150 26,846,729 1,513,521 2,528,065 2,252,220 1,863,226 1,679,132 22,510,879 1,274,549 31 19 23 24 19 19 20.3 16.2 22.0 24.1 29.5 18.2 1,995, 064 3 ,115,190 4,537,034 3,508,658 1753598 2:933:259 3,929,629 2,951,249 14 6 15 19 220 24:5 29.0 23.7 20.6 25.1 27.3 22.3 24% 45.2 ~ Total-30 centers ............ $564,958,856 $456,633,291 25. 3 25.5 27.5 14.8 55. 8 32.7 36.8 25.3 45.0 18.6 23.4 29. 2 1. Unadjusted depOSits of Individuals, partnerships, and corporations and of stateS political subdivisions 2. County basis and BANK DEBITS, END. OF. MONTH DEPOSITS, AND DEPOSIT TURNOVER SMSA's in Eleventh Federal Reserve District (Dollar amounts In thousands, seasonally adjusted) _ DEBITS TO DEMAND DEPOSIT ACCOUNTS ' DEMAND DEPOSITS ' Percent change Annua l rate of turnover December 1973 from Dec, 12 months, 1973 Dec, 31, Dec, Nov, Dec, Dec, 1973 from Standard metropo litan (Annual-rate Nov, 1973 1973 1973 1972 1972 1972 _ statistical area basis) 1973 ARIZON~A~:~Tuc-s-o-n-------------------------------$-1-5,O-88,~798--------6-%-------------------------------------------------------------43,7 46,5 $354 ,665 37,5 37% 36% 42,6 43,1 117,847 LOUISIANA: Monroe '''' "",,",,",,"",. 5,077,304 -3 40,0 16 19 49,1 352 ,453 55,8 49,6 10 20 NEW Shreveport '''''''''''''''''''''' 16,625,042 - 10 21 ,7 26,3 51 ,285 22,7 TE MEXICO : Roswell' 1,112,326 - 17 21 9 XAS: Abilene 153,457 24.0 25.8 27 23 22.2 2 Amarillo """""""""""""""""""""""""""" 130', 577159', ~8152 :: 6 45.6 250,Q97 50.7 40.8 28 28 Austin """'" '" """"""""""" " " """" " """,, , 425,147 38.5 37.8 27. 1 37 19 306,765 30.3 33.3 25.2 29 20 ,,,"" , _ Beaumoni:PoriArthur:O,;;;;ge : : " " " " " 26,0 120,940 22 22 28.5 24.2 Brownsville-Harlingen-San Benito , """ """"'" 3,122,746 - 10 30,3 17 59,323 23.7 30.4 37 Bryan-College Station """""""""" 1,778,932 1 298,282 32.7 34 .3 19 15 28.2 Corpus Christi 9,517,547 - 2 17.3 16,7 42,829 9 31 25 15.8 Corsicana ' 736,241 ~allas ""'" """"""","" 216,014,652 - 4 75.7 2,879,119 78.6 62,8 21 29 330,415 38.9 40.5 22 18 32.8 FI Paso ",,",,""",,""",,",,'" 12,203,971 - 2 43,7 866,879 41 ,1 14 30 35.2 32 ,6 15 136,558 28.8 26.3 1 33 3,509,724 54 .5 57 .9 21 46.7 25 ~o u ston " """ 188,138,784 - 2 118,270 23.1 25 21.6 32 18.6 Ileen-Temple 2,746,553 9 27 63, 186 25.2 28.4 32 21 .8 t~~ebdoOCk """""""'"'''''''''''' """" """" " ,,' 1,571,791 - 12 46 251,771 41 .4 81 42.6 27.9 31 154,794 21.9 25 22.7 18.8 19 194,857 16.2 19,0 26 14.8 Od """""""""" "'" 2,957,102 - 7 109,462 22 23.0 23,2 17.1 26 Sessa ""'" 2,438,282 0 24 93,802 24.7 24.6 30 21.7 San Angelo , """"""""'" 2,248,231 6 19 919,825 31.5 17 30.6 28.0 """ ' " ' ' ' ' ' ' 84 ,924 18.3 18 20 19.1 16.4 14 99,755 20.8 23 22.8 18.2 T~~~rkana (Texas-Arkansas) """""""",,' 1,97 1,366 - 5 13 5 135,975 25. 0 26.9 30.5 3,172,052 - 3 Waco " """"""""'" 28,1 15 158,527 27,2 14 25.7 WlchliaFalls "',"""""""''''''''',',''''''','''',' ::~~~:m 1: 155,705 27.7 24.6 34 19 23.8 1 ~:g~g:~ci~ i G~~~f~~\e~asClt'y':::' 3~:~~N~~ ~ ~fdAlallnedn-Pha;:':EdlribUrg ~:m:~~ci ~ 2~:~~~:~~ri _~ ~~~r~~~~~riiso;; :::::::::: ~at-30 centers " """""""""""""""""''',, '" '" '" $620,611 ,830 -2% 1, Deposits f I ' 2, COunty b~Slsndlvlduals, p~rtnershIPs, and corporations and of states and political subdivisions 24% $12,796,638 23% 49.4 51.4 42,1 DEMAND AND TIME DEPOSITS OF MEMBER BANKS Eleventh Federal Reserve District CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS (Averages of dally figures. Million dollars) (Tho us ___ and dOllars) ~-------------------------- ;:--Item otal gold Loan s t Certificate reserves " ~ther looa~ember banks "",,""" Uedaral age ncy '''''''''""""""""""", T' S, GOvern obligations """ MOtal earnln ment Securities " "" F ember ban1. assets """"""""" ederal R reserve deposits ClrCUl at~s:rve notes In actual ~ """"""""""""" INOU Jan. 23, 1974 Dec, 19, 1973 Dec, 20, 1972 515,254 157,230 0 87,430 3,599,587 4,359,501 1,940,704 658,072 51,630 0 77,710 3,364,149 3,475,489 1,774,638 211,268 191,155 0 51 ,019 3,052,745 3,294,919 1,392,108 2,409,081 2,439,627 2,280,725 STRIAL PRODUCTION (Season all .......... Y adjusted Indexes, 1967 = 100) ~d type of Index TEXAS Totallnd Manufactu~~trlal production " , Durable g "".".,,""""""" MI~~nduraiiie": Utilltl~s "'''''''''''''''''''''''''''''''' UNITED """'" TotanATES Manufac~~~~trlal production Durable g ""."""",,.,,"" MI~~nduraiiie '::: LJtlUtl~s '"'''''''''''' " ............. ,............. . ~"."".""""."." DEMAND DEPOSITS TIME DEPOSITS Date Total Adjusted ' U.S. Governm ent Total Savings 1971 : December " 1972: December " 1973: January" February " March , April May " June ." July " August " September , October."". November " December " 11 ,981 13,439 13,636 13,270 13,203 13,237 13,136 13,2 18 13,259 12,941 13,039 13,289 13,455 14.008 8,388 9,688 9,802 9,516 9,454 9,550 9,502 9,551 9,567 9,492 9,442 9,461 9,816 10,086 266 289 317 379 395 331 341 279 261 172 208 239 167 244 10,273 12,261 12,501 12,811 13,038 13,249 13,336 13,374 13,396 13,507 13,618 13,795 13,953 14, 154 2,509 2,812 2,815 2,817 ,2,848 2,855 2,859 2,884 2,868 2,857 2,854 2,863 2,871 2,883 1. Other than those of U.S. Government and domestic commercial banks, less cash Items In process of collection Dec. 1973p Nov. 1973 Oct. 1973 Dec. 1972 139.6 143.9 161.3 131 .3 121.9 168.1 142,5 147.3 164.2 135.1 124,1 167.3 141 ,7r 147.7r 163.0 136.7r 121 .2r 163.6r 132,5 134.9 148.2 125,3 119,0 162,2 126.6 127.1 124.0 131.4 108.9 144.5 127.3 126.9 124.1 131 .2 110.4 153.5 127.0 126.3r 123.6r 130.3r 111 .3r 156.2r 121 .1r 120.4r 116.3r 126.2r 108.2r 148.5r r-R rellmlnary SOUevlsed RCes· B ' F~dard of Governors of the Federal Reserve System eral Res erve Bank of Dallas RESERVE POSITIONS OF MEMBER BANKS Eleventh Federal Reserve District (Averages of dally figures . Tho usand dollars) Item Total reserves held "".""",,. With Federal Res erve Bank" Currency and coin """. Required reserves " Excess reserves .... Borrowings Free reserves 4 weeks ended Jan. 2, 1974 4 weeks ended Dec. 5, 1973 4 weeks ended Jan . 3, 1973 1 ,899,091 1,567,849 331 ,242 1,937,430 -38,339 43,071 - 81 ,410 1,874 ,271 1,558,273 315,998 1,865,914 8,357 53 ,797 - 45,440 1,712,981 1,411 ,830 301,151 1,750,928 - 37 ,947 81,986 -119,993 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT BUILDING PERMITS Five Southwestern States' VALUATION (Dollar amounts In thousands) Perc ent change Dec. 1973 from NUMBER Thousands of persons 12 months. Area Dec. 1973 ARIZONA Tucson .. LOUISIANA MonroeWest Monroe .. Shreveport.. TEXAS Abilene ... Amarillo Austin .... Beaumont . Brownsvill e .. Corpus Christl .. Dallas .... ... .. Denison .. EI Paso ........... Fort Worth .. Galveston . Houston .. . Laredo Lubbock Midland . Odessa ... Port Arthur .. San Angelo . San Antonio .. Sherman . Texarkana .. Waco ...... .... Wichita Falls . Total-26 cities .. 6.060 12 mos. 1973 Dec . 1973 12 mos. 1973 Dec. 1972 1973 from 1972 -27% - 64% - 13% 27.635 78.604 260 71 242 88 17 28 23.299 54.980 239.664 36.363 41.271 53.541 318.398 3.859 170.528 114.592 11.218 680.867 16.276 76.783 12.580 16.398 6.908 11 .770 223.888 21.560 5.997 36.080 37,475 - 46 224 - 31 69 - 36 - 48 - 39 848 43 41 - 50 - 18 - 84 51 - 80 - 40 0 - 28 -45 - 99 176 - 78 - 12 - 50 107 -27 - 69 25 - 64 - 21 126 -24 - 36 - 86 - 49 -77 39 - 47 -59 113 112 - 45 -70 118 - 89 - 54 36 62 0 20 159 - 12 - 17 - 2 - 1 23 -26 2 26 22 - 28 - 32 29 37 0 181 - 14 - 15 137 - 25% - 36% 329 5.811 $3.882 $148.493 34 321 844 5,448 2.531 4.266 46 82 306 114 81 140 972 26 353 245 31 1,417 32 81 34 50 49 73 1.042 19 41 93 49 81 5 1.796 5,465 2.258 1.162 3.087 18.5 16 316 5.851 4.283 629 29,215 497 1.724 872 1.117 1.082 913 19.778 415 614 2.331 879 358 6.805 15.513 1.519 3,411 1.289 17.654 199 8.299 5.566 367 41.334 98 6.380 208 491 850 1.215 8.102 108 607 736 792 ------ Nov. 1973 115.7 18 $132.580 $2.469.027 - (Seasonally adjusted) Item Civilian labor forc e .. Total employment Total unemployment.. Unemployment rate . Total nonagricultural wage and salary employment ................ ...... Manufacturing .. Durable Nondurable . Nonmanufacturlng . Mining ..................... Construction Transportation and public utilities Trade Finance Service ........... Government .. . Percent change Dec. 1973 fro~ - Dec. 1973p Nov. 1973 1972r Nov. 1973 DeC. 1972 9.014.4 8.664.9 349.5 3.9% 9.001.5 8.668.0 333.5 3.7% 8.747 .3 8.413.3 334.0 3.8% 0.1% .0 4.8 ' .2 3.1% 3.0 4.6 ' .1 7.204.4 1.261.5 711 .7 549.8 5.942.9 235.4 507 .7 7.201 .6 1.256.9 710.9 546.0 5.944 .7 236.8 503.7 6.930.4 1.215.5 672.6 542.8 5.714.9 230.7 474.6 .0 .4 .1 .7 .0 -.6 .8 4.0 3.8 5.B 1.3 4.0 2.0 7.0 488.3 1.710.3 397.0 1.178.3 1,426.0 488.5 1.719.0 394.8 1.177.4 1,424.5 470.4 1.648.4 372.1 1.130.2 1.388.6 .0 -.5 .6 .1 .1% 3.B 3.8 6.7 Dec. 1. Arizona. Loui siana. New Mexico. Oklahoma. and Texas 2. Actual change p-Prellmlnary r-Revlsed NOTE : Detail s may not add to totals because of rounding . SOURCES : State employment agencies Federal Reserve Bank of Dallas (seasonal adjustment) ~:~% --- 2% DAILY AVERAGE PRODUCTION OF CRUDE OIL (Thousand barrels) VALUE OF CONSTRUCTION CONTRACTS Percent (MIllion dollars) Area Dec. 1973 Nov. 1973 1972r Nov. 1973 FOUR SOUTHWESTERN STATES ........... Louisiana ... .... New Mexico ....................... Oklahoma ....................... Texas ............. Gulf Coast ... West Texas ................. East Texas (proper) .. Panhandl e . Rest of state .. UNITED STATES . 6.512.0 2.148.6 271 .2 516.2 3.576.0 702.4 1,858.0 239.2 59.6 716.8 9.103.0 6.551 .3 2.134.5 265. 1 523.5 3,628.2 713.0 1.882.2 243.0 60.4 729.6 9.130.5 6.793.2 2,404.4 287.0 528.3 3.573.5 710.5 1.812.7 250.4 58.9 741 .0 9.347.3 -. 6% .7 2.3 - 1.4 - 1.4 - 1.5 - 1.3 - 1.6 - 1.3 - 1.8 -. 3% January - December Area and type Dec. 1973 Nov. 1973 Oct. 1973 1973 1972r FIVE SOUTHWESTERN STATES' .. Residential building Nonresidential building .. Nonbulldlng construction .. UNITED STATES ........ Resid ential building Nonresidential bulldlns/- ..... Nonbulldlng construction .. 871 264 474 133 6.133 2.341 2.210 1.581 1.011 368 339 304 7.905 3.299 2.655 1.95 1 1.132 385 356 391 8.983 3.673 2.758 2.552 11 .902 5.258 4.259 2.384 100.071 46.246 31 .761 22.064 11 .322 5.752 3.083 2.487 90.979 44.975 27 .021 18.983 1. Arizona. Loui siana. New Mexico. Oklahoma. and Texas r-R evlsed NOTE : Details may not add to totals because of rounding. SOURCE: F. W. Dodge. MCGraw-Hili . Inc. Low temperatures and dry soils have hindered winter wheat development in the High Plains_ And with dryland wheat conditions deteriorating, some stocker cattle have been moved off wheat pastures into feedlots. Although the adverse weather greatly increased supplemental feeding, most livestock remained in good condition. The number of cattle and calves on feed in Texas and Arizona on January 1 was marginally below a year earlier. Marketings in the fourth quarter of 1973 were moderately higher than in the same Dec . """ Change~ Dec. 197~ - 4.1'16 - 10.6 - 5.5 - 2.3 .1 - 1.1 2.5 - 4.5 1.2 - 3.3 - 2~ r- Revised SOURCES : American Petroleum Institute U.S. Bureau of Mines Federal Reserve Bank of Dallas period in 1972. But falling prices and sharply lower earnings discouraged cattle feeders, and placements into feedlots dropped below the year-earlier level. In the month ended December 15, a moderate advance in average crop prices received by Texas farmers more than offset a decline in livestock prices. As a result, the index of prices received for all farm products increased marginally from a month earlier and was 42 percent higher than a year eru:lier. The index of prices paid by U.S. farmers also advanced slightly in the month ended December 15, primarily due to higher prices for feed, f\;lel, and fertilizer. The index was 17 percent higher than a year before. Bolstered by higher prices and increased production, cash receipts from farm marketings in District states through November 1973 totaled $9.5 billion-a significant 39 percent higher than in the same period in 1972. Crop receipts advan' ced 70 percent to nearly $3.8 billion, and livestock receipts, at $5. 7 billion, were up 24 percent.