Economic Conditions, Freight Transport
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2010–2035 Oklahoma Long Range Transportation Plan nation’s, which registered a CAGR of 0.8 per- Chapter 5 Oklahoma Economic cent over the same period. High oil prices and Conditions and Freight Transportation mining sector expansion are partly responsible Background Economic Information for the State’s higher employment growth, as are the State’s expanding service sectors. Overview of Oklahoma Economy In 2009, a total of 1.7 million persons worked in The Oklahoma economy has evolved signifi- Oklahoma, and over 95 percent of this group cantly over the past two decades. Since the oil worked non-farm jobs (Figure 5-2). The largest price collapse in the mid-1980s and the subse- employer is health care and social assistance, quent economic slowdown, Oklahoma has while state and local government, manufac- become less dependent on its natural economic turing, professional and business services, and resource bases of energy and agriculture. retail trade continue to be a major source of the Although they remain an important part of State’s employment. While agriculture is an Oklahoma’s economy, other sectors, such as important contributor to State GSP, the industry services and manufacturing, have grown in is not labor-intensive. relative importance. As a result, the Oklahoma economy has become more diverse than it was Major Industries 20 years ago. Agriculture Industry 1 In 2008, the Gross State Product (GSP ) of Okla- Oklahoma is one of the nation’s largest homa was $108 billion, accounting for producers of livestock and wheat, generating one percent of U.S. Gross Domestic Product $5.8 billion in value of agricultural products in (GDP). Five industries contributed to more than 2007.3 Over the past decade, Oklahoma’s half of the State’s GSP. The five largest contribu- agriculture sector has become increasingly tors to Oklahoma’s real GSP by rank in 2008 diversified. While it has traditionally been 2 are government (15 percent), manufacturing dominated by wheat and cattle production, the (13 percent), retail trade (9 percent), real estate swine and poultry industries have grown rapidly (8 percent), and healthcare (7 percent). The over the past decade, becoming the nation’s State’s real GSP increased at a compound second and third largest producers of the annual growth rate (CAGR) of 2.91 percent from respective commodities. 1999 to 2009 as compared to the nation’s real Based on the 2007 National Agricultural GDP growth of 1.83 percent during this period. Statistics Survey, there were approximately It should be noted that during the latter half of 86,500 farms in Oklahoma, a slight increase this time period, 2004 to 2009, Oklahoma’s real from the 84,000 figure recorded in 1997. Farm GSP continues to grow at a faster pace as acreage has exhibited little change over the compared to the U.S., as shown in Figure 5-1. period. Despite the relative stability in physical Employment size and number of operations, the industry has been changing in terms of its structure. It has According to the U.S. Bureau of Labor Statistics been increasingly shifting ownership from small (BLS), total non-farm employment in Oklahoma independent farming to large corporate-based increased over the past decade at a CAGR farming. (2001–2008) of 1.3 percent. Growth of Oklahoma employment has outpaced the 5-1 Chapter 5—Oklahoma Economic Conditions December 2010 14,000 160 12,000 140 120 10,000 100 8,000 80 6,000 60 4,000 40 US Rreal GDP (BillionUS Dollars) 2,000 20 0 0 Oklahoma Real GSP (Billion Dollars) 2002 1999 2000 2001 2003 2004 2005 2006 2007 2008 2009 United States Oklahoma Source: Bureau of Economic Analysis (BEA) database. Figure 5-1. Oklahoma Gross State Product and U.S. Gross Domestic Product, 1997 to 2009 Figure 5-2. 2009 Employment by Industry Oil and Gas finance and other industries. Oil and gas mining Since the oil-price collapse in the 1980s, currently makes up three percent of the State’s Oklahoma’s economy greatly reduced its employment, a much lower share than its reliance on the “boom and bust” oil and gas 8.7 percent in 1982. sector through its diversification into aerospace, 5-2 2010–2035 Oklahoma Long Range Transportation Plan Over the past eight years, the oil and gas sector manufacturing are concentrated in the two experienced strong growth as a result of high oil major MSAs and the northeastern part of the prices. The value of the sector’s economic State, food manufacturing is more concentrated activity increased at an average annual rate of in the agricultural northwestern and 7.5 percent, employment at 4.1 percent, and southeastern parts. the average number of active drilling rigs increased from 129 in 2000 to 200 rigs in 2008. Southeast However, this positive trend did not carry Southwest OK 5% OK through 2009, as falling oil prices (that began in 11% the last quarter of 2008) affected State drilling Oklahoma City MSA activity. During the first quarter of 2009, the Northeast OK 30% number of active oil rigs in Oklahoma fell to 13% 4 150. Northwest OK Tulda MSA Minerals Mining 5% 36% In addition to oil and gas, Oklahoma has abundant mineral resources, such as coal, sand, Source: Oklahoma Economic Development Council (OEDC). gravel, gypsum, granite, limestone, and salt. Over the past 20 years, the mining industry in Figure 5-3. Geographical Distribution of Manufacturing Establishments in Oklahoma, 2007 Oklahoma has changed. Coal production has significantly declined from the peak production Over the past decade, the real value of period of the early 1980s, while limestone, economic activity generated from Oklahoma’s sand, and gravel have emerged as dominant manufacturing sector increased at a CAGR commodities within the mining sector. Although (1997–2008) of 2.6 percent, slightly outpacing not as prominent a sector as in the 1980s, the nation’s overall 2.4-percent growth. This Oklahoma’s minerals mining industry (not growth in economic value was largely bolstered including oil and gas) is an important by the expansion of high-value goods manufac- 5 contributor to GSP, generating $1.8 billion in turing, such as aerospace and industrial 2007. machinery. Manufacturing Transportation and Warehousing In 2007, the manufacturing sector contributed According to the U.S. Census, 2,630 transpor- 11 percent, or $15.5 billion to Oklahoma’s GSP. tation and warehousing establishments exist in The sector is dominated by the manufacturing the State, employing over 64,000 people or of energy and aerospace machinery, fabricated three percent of Oklahoma’s labor force in metal products, and food processing, particu- 2006. Distribution facilities are especially larly that of meat products. abundant in the Oklahoma City metropolitan In 2007, 4,444 manufacturing establishments area, where the major highways of I-44, I-40 operated in the State.6 The Oklahoma City and and I-35 intersect, offering connections to the Tulsa MSAs are home to over 65 percent of State’s major north-south and east-west these establishments (Figure 5-3). While corridors. machinery and fabricated metal product 5-3 Chapter 5—Oklahoma Economic Conditions December 2010 Over the recent years, distribution center in Oklahoma City, and Vance in Enid—as well as development increased in south central the Fort Sill army post in Lawton. Oklahoma, in Garvin and Carter Counties. This growth is largely supported by the rapidly Economic Forecast, 2008 to 2035 growing U.S. consumer market, to which these Overview counties are proximately located. Within Carter County, the City of Ardmore has become a IHS/Global Insight’s Regional Economic Service particularly attractive retail center and ware- estimates that the economy of Oklahoma will housing site, as it offers direct access to the recede in 2009, decreasing by 2.6 percent Texas market via I-35, Burlington Northern before resuming a 2.2-percent growth the Santa Fe Railroad (BNSF), as well as a 2,900-acre following year, as shown in Figure 5-4. Overall, industrial airpark. Oklahoma’s downturn is expected to be less severe than that of the nation because of the Entertainment, Arts, and Recreation relative stability of the State’s housing market, Oklahoma’s booming entertainment, arts, and which did not experience the same tremendous recreation industry has become an important boom as much of the U.S. in the past decade. State revenue source. The popularity of The strong military presence in the State also Oklahoma’s entertainment industry has spurred lends a buffer to the local economy, providing growth among Native American tribes to relatively stable employment and external develop bigger and more elaborate casinos to monetary resources in the form of federal capture market share. In 2008, Oklahoma’s defense spending. gaming revenues amounted to $ 2.5 billion, a Over the long run, the Oklahoma economy is 7 22.5 percent increase from the previous year. estimated to grow at a moderate pace, with This significant jump is primarily attributed to real GSP projected to increase at a CAGR of the passage of State legislation that allowed 2.5 percent and employment at 0.9 percent tribes to use Class III games, such as slot from 2015 to 2038. The local economy will machines and card games. The industry’s continue its course of diversification away from contribution to the State is estimated to be its dependence on natural resources. The $178 million in 2008.8 strongest growth, both in terms of contribution to GSP and employment, will be led by Military Related expansion of the service sectors, specifically The military is one of the State’s largest professional and business, healthcare, and employers in Oklahoma, providing approxi- finance.