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Page added on February 25, 2016
Oil rout hits Houston’s rich
Prices for mansions in Houston’s swankiest neighborhood have tumbled in lock step with crude prices. The Houston Opera has offered free season tickets to patrons who lost their jobs in the oil bust. A fancy restaurant offers cut-price dinners.
Twenty months into the worst oil price crash since the 1980s, well-heeled residents of the world’s oil capital are among the hardest hit largely because tanking energy firm shares make up much of oil and gas executives’ compensation.
In River Oaks, a neighborhood of palatial mansions and lush gardens, the average sales price of a home has tumbled to $1.3 million from $2 million in the middle of 2014 when oil began its more than 70 percent slide, according to data from the Houston Association of Realtors and Keller Williams. Median property prices in the area have already fallen further in this downturn, which is not yet over, than the 16 percent drop in the previous oil slump in 2008 and 2009.
“When oil does well, River Oaks does well. When oil does bad River Oaks does bad,” said Paige Martin, a Keller Williams broker who specializes in the neighborhood. “Not everybody can afford a $10 million house.”
City-wide data also show that while overall sales of single family homes fell 2 percent in January, sales of those priced over $500,000 tumbled 9 percent. The overall median house price was $200,000, up 5 percent on the year, according to the realtors’ association.
While Houston’s economy is far more diversified now than in the 1980s when the city lost 13 percent of its jobs, it remains home to 5,000 energy-related firms and the fortunes of oil and gas executives are tied more than ever to the energy market.
Since U.S. lawmakers passed a law in 1992 encouraging “performance-based” pay, the share of stock options in executive compensation has steadily increased, said David Bixby, head of the Houston office for Pearl Meyer compensation consultants.
“Now, you’re looking at 70 to 80 percent of CEO compensation in stock on average for oil and gas companies,” he said. “They are going to be exposed to commodity price cycles.”
ACROBATS AND FOR SALE SIGN
For example, former oil executive, Kolja Rockov, whose extravagant wedding with dancers and acrobats became a local online sensation three years ago, briefly put his unfinished mansion on the market for $6.9 million, according to listings. Work appeared to stall on his house as an SEC filing showed he involuntarily sold 239,000 shares of the company’s tanking stock he had used as a collateral for a loan. Rockov lost his job as Linn Energy LLC’s (LINE.O) CFO in August.
Rockov could not be reached for comment.
Luxury car sales are also slower in Houston than in other parts of the state and the country.
“If you’re working for an energy company, you see all this stress around you, it might nick your purchase confidence, even if you are fairly high income,” Earl Hesterberg, chief executive of Houston-based Group 1 Automotive Inc (GPI.N), told Reuters.
He said excess inventory was most acute for top line BMW (BMWG.DE) and Mercedes-Benz (DAIGn.DE) models in Texas and Oklahoma.
In a nod to the downturn, Ouisie’s Table, a River Oaks institution, is now offering its “Oil Barrel Bargain,” a three course dinner for the price of a barrel of oil, now around $30.
To be sure, oil executives are not alone in feeling the pain. Many blue collar jobs in oilfield equipment production have disappeared. So have thousands of middle management jobs in oil exploration and production. A regular Uber customer is likely at some point to ride with a former energy industry professional.
“It pays for the mortgage,” said Matthew Clemonds, who once did mapping for pipeline companies and now works for the ride-sharing company.
Job growth has slowed to a crawl from the breakneck pace of 100,000 a year during the oil boom; housing starts are down and subleasing of new office space is rising, according to government data and NAI Partners, a real estate consultancy.
But so far, owing to its diversity, the metropolitan economy has shown remarkable resilience, adding 20,000 jobs to just over 3 million last year.
For example, Houston is home to the Texas Medical Center, the world’s largest cluster of hospitals, research facilities and affiliated universities, which says it employs 106,000.
In the energy sector, about $50 billion being invested in new petrochemical plants to take advantage of cheap supplies is helping offset upstream job losses.
“This is the best oil price downturn we have ever had,” said Ted Jones, chief economist at Stewart Title Guaranty Company. “We still have more jobs than we have ever had in history.”
Bill Gilmer, a University of Houston economist, says so far it has paid off to tough it out through oil’s booms and busts and notes that ever since 1969 Houston has consistently ranked among the fastest growing U.S. cities.
“The only problem is that it can be a rollercoaster.”
18 Comments on "Oil rout hits Houston’s rich"
Dredd on Thu, 25th Feb 2016 10:58 am
You mean those who made up thermal expansion myths?
Neverlution (On The Evolution of Sea Level Change – 2).
ghung on Thu, 25th Feb 2016 1:03 pm
Oil crash: Halliburton slashes another 5,000 jobs
“Halliburton is cutting 8% of its global workforce, or roughly 5,000 positions, the Houston energy company told CNNMoney on Thursday…..
…The latest pink slips bring Halliburton’s job cut tally to between 26,000 to 27,000 since employee headcount peaked in 2014, the company said…
…Halliburton has also attempted to cope with cheap oil by consolidating facilities in 20 countries, and closing down operations altogether in another two countries.
The oil downturn has sent Halliburton’s profits plunging. Its stock price has lost more than half its value since mid-2014 when crude prices peaked.”
PracticalMaina on Thu, 25th Feb 2016 1:23 pm
Ghung, just as Obama closed the slavery loophole, weird, they get into the shrimp business when no one was looking? After all they had a large hand in killing the gulfs shrimp. Their stock price should have already been dirt because we should have cut them off from government contracts after their 8 years of no bid contracts, and their well blowout safety equipment failure should have landed a large part of the lawsuit against BP against them IMHO.
J-Gav on Thu, 25th Feb 2016 2:55 pm
I feel so bad for the rich people of Houston that I think I’ll burn a candle for them this evening .. and perhaps even say a little prayer/poem – something along these lines:
A sad day it is
when the rich in “the Biz”
have to tighten their belt a short notch,
Though they bellow and shout,
they’d better watch out,
for the next target may be their crotch.
theedrich on Thu, 25th Feb 2016 6:42 pm
Well, the economic problems of a few rich people in Houston are invisible compared to what we are currently facing in the lethal poisoning of the entire nation’s youth by narcotraffickers.
On Monday, 2016 Feb 25, before the House Appropriations Committee, FBI director James B. Comey Jr. was asked by Chairman of the Approprations Committee, Congressman Hal Rogers (KY-05) about the exploding narcotics pandemic:
“Those abusing prescription painkillers often turn to heroin as a cheap alternative. In just the last decade, heroin in America has increased 63 percent,” stated Rogers. “As I understand it, the emergence of the powerful synthetic fentanyl on the black market has dramatically increased the potency of heroin and heroin-related deaths along with it.”
“Almost all of it – the methamphetamine and heroin – are coming from Mexico. There’s lots of challenges to the interdiction effort and I believe it is an emergency in the United States,” said Comey. “Fentanyl is 40 to 50 times more powerful than heroin and they’re mixing it, a lot of which comes from China, which is something we’re now focused on. Even the people who have gotten used to heroin are killed in a snap. There are tens of thousands of people dying from opioid abuse and heroin.”
In spite of the statements above, the plutocrats, the “affluenza” classes, their allies in government and the mainstream media moguls who control our politics, are unconcerned. All they want is to continue their economic vampirism by importing more Latino and other undocumented Democrats. The politicians (stereotyped by such as Hotflash Hillary) are paid off by the big banks who are enjoying “liquidity” from international drug cartels and other criminal organizations. The elites’ obsession is mainly to attack Donald Trump, who wants to halt the massive infestation by aliens (including the millions of visa-overstayers) and their poisonous “diversity.” The megalomaniacs’ only concern is continuing their feeding frenzy by electing Clitory.
And thanks to their efforts, meanwhile vast numbers of young Americans are dying. But the ever-so-compassionate anti-Whites (and, one might add, anti-American Blacks as well!) could not care less.
Practicalmaina on Thu, 25th Feb 2016 8:35 pm
That’s the good old for profit domestic pharmaceutical biz. Only an issue now that Chinese company’s are getting in on it? This has been going on for a while and is suddenly an issue.
http://www.businesswire.com/news/home/20160203006669/en/IMPORTANT-SHAREHOLDER-ALERT-Goldberg-Law-PC-Files
Booom
Brett on Fri, 26th Feb 2016 12:24 am
Hey “theedrich” your poster-boy Adolf loved his daily dose of gear. I thought that you would be the same?
GregT on Fri, 26th Feb 2016 12:58 am
“In spite of the statements above, the plutocrats, the “affluenza” classes, their allies in government and the mainstream media moguls who control our politics, are unconcerned”
Another black mark against whitey theedrich. The most ruthless and greedy ape sub-species. The Earth would be much better off without us. Too bad that the vast majority of those young
Americans dying are not white.
You should be ashamed of your race. I know I am.
theedrich on Fri, 26th Feb 2016 2:36 am
Nihilist genosuicidists like you, Greggie boy, are always looking for any excuse to terminate evolution. You are the type who likes to promote the lie machine of Judeo-Christianity and the MSM drivel which hypnotizes naïve youth into self-destruction. Filth like you cannot stand the truth; you need to drag the White race down into the hellhole of suicidal untruths you and your deranged kind wallow in.
Practicalmaina on Fri, 26th Feb 2016 5:47 am
So you didn’t look at my link? You know that heroine is primarily coming from afgany fields right? How does it get here on such a scale? And it was an American company selling the product, using false advertising, that is in the heroine that causes a majority of the ods. The 1% working hard to tear apart society.
Greg he’s not ashamed, his cultural cognition cannot handle the reality of the world. He must have been raised to never look inward at rthe causes of his issues, and instead always looking for an easy recognizable darker skinned scapegoat.
Mark on Fri, 26th Feb 2016 8:31 am
It;s bad for rank & file workers in the industry who are losing their jobs in a rush.(and perhaps a lot more)
As for the elites, they’ll find some other way to stay wealthy, they always do.
penury on Fri, 26th Feb 2016 9:49 am
I wish people would realize that addiction to a “heroine” would be worse than addiction to “heroin”, In my mind I have the first addiction and it takes all of my efforts to support it.
PracticalMaina on Fri, 26th Feb 2016 11:44 am
Doh oops. Does not take away from what was in that article, pretty messed up it is so much easier for shareholders of a family to sew it than family of people it harmed.
Did Johnson and Johnson hide internal knowledge of talcum powder causing cancer? Glad I do not own stocks, we need to look into who we have allowed to control policy in this country for decades. Meaning corps with their “rights” as if they were part of the public that they are poisoning.
rockman on Fri, 26th Feb 2016 3:25 pm
J-gav: Don’t worry…the vast majority of the Houston rich are still very rich. And that includes many of the management (and former managers) of the shale players. Remember most knew the bubble was going to pop…just a question of when. Like the boys who sold their Eagle Ford acreage for $15 BILLION. I’m pretty sure they aren’t missing ant meals. LOL.
And those that hung on to their stock positions too long? The old adage still applies: pigs get fat and hogs get slaughtered. LOL.
theedrich on Sat, 27th Feb 2016 5:51 am
So the proctological PracticalMan joins the maggot Greggie boy in his hatred for the White race. The real question is why they and their cohorts do not join the swarthy sludge they love so much, and migrate to the Third World hellholes to show the dross there how much they prefer squalid subhumans.
Davy on Sat, 27th Feb 2016 7:41 am
The blame and complain crowd crowing the usual race and class warfare. It is not that race and class are not issues. They are issues, they have been issues and they will always be issues. The problem is the why and what can be done. We are in macro systematic limits to growth and systematic diminishing returns. Fixing race and class issues is not going to fix that. More deaths than births and adjustments to broad based poverty will. We are going to have less wealth with more people. This will then become less wealth with more people dying.
There is not enough rich people in the world to take care of all the poor. Eliminating rich people also destroys the economy. You can’t expect that kind of disruption to improve an already dangerously exposed economy do you? People that trumpet per capita ideas fail to understand global economics. They discount the effects of overpopulation. You know the usual if everyone lived like a third world’er we would have enough food. That is how simpletons think.
We are systematically overconsuming per our range of sustainability and resilience to shocks. We are being shocked now in multiple ways. Social and economic shocks typically are accompanied with people turning to class and race warfare. The class warfare has legitimacy the race issues are wrong and should be diminished brutally. Class issues are going to adapt to a world with less wealth. This means less wealthy people and nations. The wealthiest nations will become more third world. Isn’t that not happening to the US now?
The rich will be taking a huge hit soon without a recovery. The financial markets are going to be gutted. OOPs there goes that retirement the rich have been saving for all their lives. The rich generally don’t know adversity or hard labor. They need to get acclimated to it. Even many of the developed nation’s poor have not known adversity because they have been living with a safety net of support protecting them from the worst adversity. Those third world nations already in the worst of overshoot they are going to see widespread famine engulf all classes. This is the end game so bitch mown and complain all you like. Lynch some people if that makes you feel better. Nothing is going to change a die off. You may replace one have group with another for a time but soon we are all have nots.
GregT on Sat, 27th Feb 2016 7:49 am
It wasn’t the Third World “squalid subhumans” that lead mankind down the path towards a global mass extinction event theedrich. Evolution doesn’t get much more terminal than that. Whitey is an evolutionary dead end.
onlooker on Sat, 27th Feb 2016 8:48 am
Yeah you want to blame people for following a biological imperative but not for the immense greed and exploitative nature of the rich in rich countries. I suppose theedrich you think that no blame/fault exists for what we did to the Native Americans. Dream on.