James Lebas, former chief revenue estimator for the Texas Comptroller’s office, made news recently when he told the state’s House Committee on Energy Resources that, working with the Comptroller’s office, he had determined that output from the oil and natural gas industry now accounts for fully one-third of the entire Texas economy. Given that the Texas economy would rank 12th among all nations on earth, that’s an amazing amount of economic activity for one industry to provide.

Yet, it should not surprise anyone who has really been paying attention to the phenomenal boom the industry has undergone in Texas since 2010. As Lebas, who now works as a tax and fiscal consultant in Austin, told me when I spoke with him last week, “It’s best to recognize you are in a golden age while you’re in it.”

Or, as he told the Energy Resources Committee, “When people look back at this in 20 years, this will be seen as part of the golden age. We have reached new highs, it is paying handsome dividends to the state and the state is doing very well. We’ve gone from one million barrels a day to three million, and the day may come when we eclipse the all-time record set in 1972.”

The story of this Golden Age gets even better when one looks at where a ‘Nation of Texas’ would rank when it comes to oil and gas production: Texas would rank as the 8th largest oil producing nation and the 3rd largest natural gas producing nation on earth. Granted, Texas is a big ‘ol state, but still, that kind of natural resource production is pretty amazing from any perspective.

The most recent Federal Bureau of Labor Statistics data indicates that, while the nation’s economy continued to struggle over the last year, Texas was adding more than 1,000 net new jobs every day, more than 390,000 for the most recent 12 month period. By contrast, California, which has highly restricted the growth of its own energy production, has added just 322,000 net new jobs in the last five years combined. The state’s unemployment rate of 5.1 percent was a full point below the national average. Indeed, a recent report from Bernard Weinstein, Associate Director at the Maguire Energy Institute at SMU showed that Texas has accounted for fully 35% of the nation’s job growth since the year 2000.

Lebas pointed out to the Energy Resources Committee that jobs in the oil and gas production sector rose above the 400,000 level last year for the first time, at an average wage ($125,000) that is three times the state average. Tax collections from the industry via the sales and production taxes exceeded $13 billion during 2013, and will be even higher this year.

Oil and gas development also helps to create jobs in other industries. The advent of massive new reserves of affordable domestic natural gas has in recent years led to a nascent manufacturing renaissance in the U.S. Industries that use natural gas as a feedstock – fertilizers, chemicals, clothing, plastics, steel, and many others – have begun to invest tens of billions in new plant and equipment here in the U.S., creating domestic jobs that had been sent overseas over the last quarter century.

For the state’s government, this Golden Age in oil and gas has also led to a bit of a Golden Age in the state’s fiscal situation. Prior to the boom’s beginnings in 2010, Texas state government had been in a state of chronic budgetary shortfalls for about a decade. In fact, when the legislature convened in January 2009, that shortfall was estimated to be as high as $25 billion for the following 2 year budget cycle. In 2007, the legislature and Governor had to figure out how to close about a $10 billion shortfall.

When the legislature convenes in January of 2015, Lebas estimates that it will enjoy a budgetary surplus in the vicinity of $7 billion. In addition to that, Lebas agrees with the Comptroller’s estimate that the state’s Rainy Day Fund will have a balance of about $8.4 billion, and that is assuming that Texas voters approve a ballot initiative in November that would allocate about $1.7 billion in Rainy Day Fund money to the Texas Department of Transportation to help pay for road improvements and repairs. Guess how the Rainy Day Fund is funded: via severance taxes levied on oil and natural gas.

So the challenge for the 2015 legislature won’t be how to close a multi-billion dollar budget shortfall; instead, it will be how not to squander a gigantic budget surplus.

Given all of this, one might think that Texans everywhere would be thanking the oil and gas industry for its role in creating such a dramatic turnaround in the state’s fiscal fortunes. And for the most part, that thought would be right – the vast majority of Texans do appreciate the myriad ways this great industry benefits our state.

But there will always be those who oppose oil and gas development in this state – and everywhere else – for a variety of reasons, whether real or imagined. Anti-development agitator groups have long been active in the Barnett Shale region of North Texas, and are becoming increasingly active in other parts of Texas.

When I brought that all up to him, Lebas drew this analogy: “Opposing the oil and gas industry in Texas is like booing Santa Claus at the Christmas parade.”

True story. Sure wish I’d have thought of that.

God Bless Texas.

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