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Issue 5, September/October 2006
Federal Reserve Bank of Dallas
President's Perspective
 Like
every American, I have felt the sting of paying $3 for
a gallon of gasoline, and my jaw drops when I open my
power bill.
As a central banker, I have the
added burden of worrying about potential inflationary
ripples from rising energy costs and their impact on
the U.S. economy. Paying more for energy takes a chunk
out of the consumer’s pocketbook, leaving less
to spend on other goods and services—the prices
of which are rising as producers pass on their higher
costs.
The future path of energy prices
is hard to predict. We do not know how much of the recent
run-up in these prices results from geopolitical turbulence,
market speculation, growing demand in emerging economies
or real limitations on current and future supplies.
Texas occupies a special niche
in energy markets. The state grew rich on oil and gas,
and it has been a world leader in the industry for more
than 100 years. This gives Texans a different perspective
from most of the rest of the country.
In recent decades, the Texas economy
has successfully diversified into many other industries,
and oil and gas no longer occupies the legendary place
it once did. However, today’s rising energy prices
have spurred new drilling activity across the globe,
and our oil and gas expertise is in hot demand.
Energy producers are eager to
capitalize on high prices by tapping the vast supplies
of oil and gas lying under the earth. New resources
are being tapped, new technologies are being developed
to extract and transport hydrocarbons, and our refineries,
rigs, ports, plants, storage and other industry infrastructure
are being expanded, resulting in new jobs and added
strength to our economy.
While these benefits may not remove
the pain each of us feels at the pump, collectively
we are getting some relief from the Southwest economy’s
comparative advantage in the oil and gas business.
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Richard W. Fisher |
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President and CEO |
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Federal Reserve Bank of Dallas |
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Southwest Economy
Southwest Economy
is published six times annually by the Federal
Reserve Bank of Dallas. The views expressed
are those of the authors and should not
be attributed to the Federal Reserve Bank
of Dallas or the Federal Reserve System.
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