AUSTIN – The growing series of sanctions imposed by the United States on Russia for its invasion of Ukraine could have a net positive effect on the economy of Texas due to the increase in the price of oil and stimulate the production of state energy.
That’s the word of three economics experts who testified Wednesday before the Texas House Committee on International Relations and Economic Development, which seeks to gauge how U.S. import and export restrictions on Russia will play out as the state is still grappling with supply chain issues caused by the COVID-19 pandemic.
“At the end of the day, as an economy, we’re not terribly dependent on Russia,” said Ray Perryman, one of the state’s top economic forecasters, who was asked to appear before the panel. “In Texas, we import about $5 billion worth of goods from Russia. Last year we exported about $650 million to Russia combined. That was just under 1% of our total trade.”
Beginning in late February, when Russian President Vladimir Putin’s intention to invade the former Soviet state of Ukraine became clear, President Joe Biden ordered that the United States not do business with the biggest banks. Russians and froze trillions of dollars in Russian assets.
Additional measures were added over the following weeks, and many allies, including Britain, followed suit. The assets of many prominent Russian political leaders and oligarchs, including members of Putin’s family, have been frozen.
Imports and exports involving Russia have also been restricted.
Perryman noted that oil overwhelmingly topped the list of goods imported into Texas from Russia. But most of it is used as refined products unrelated to transportation. Texas’ main export to the country is the manufacture of products used in oil production, he said.
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“The other thing I want to point out about this is that we’re currently preparing for oil production in Texas,” Perryman said. “Every other oil-producing region in the world is ramping up production right now. There (are) many other markets for our oil equipment.”
Tom Currah, a top aide to Texas Comptroller Glenn Hegar, told the panel that rising prices for oil pumped from the Permian Basin in West Texas will likely bring more tax revenue to the state over the course of the year. of the current budget cycle than the initial estimates. had suggested.
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An increase in production that tends to follow price spikes will likely mean more purchases of oilfield equipment for home use, and those high purchases will likely translate into increased sales tax collection.
Pia Orrenius, vice president and chief economist at the Federal Reserve Bank of Dallas, said Texas is expected to outpace the country as a whole in job growth and economic activity. Some of that has to do with sanctions on Russia, some with the continued recovery from the pandemic, and some with Texas’ magnetic population from other states, she added.
“Despite a significant impact of COVID on public health and labor supply in Texas, our growth has outpaced the nation during the pandemic and also this year,” she said.
Orrenius said while Texas posted a staggering 1.4 million job losses at the start of the pandemic, that deficit was fully erased by December 2021. However, this was not a one-for-one replacement. , she said. Many sectors of the state’s economy, such as manufacturing, are still struggling, while the service and hospitality industries are thriving.
Among the danger signs, experts said, are the 40-year peak in inflation and the lingering uncertainty caused by the pandemic and made worse by the Russian invasion.
“We’re going to be affected by what’s happening with the supply chain,” Perryman said. “We can’t avoid this no matter what we do.”