In Texas — the largest oil and natural gas producing state in the country — the energy sector is a crucial part of the “engine of the economy,” said Darren Whitehurst, president of the Texas Automobile Dealers Association.
“If the price of oil stays at $30 or below, it will have a dramatic impact on the state of Texas,” he said.
West Texas Intermediate, a grade of crude oil used as a benchmark in pricing, was trading around $30 last week. Its 52-week high is nearly $67.
Whitehurst said that every time there has been an oil bust, it has rippled through the Texas economy. While some consumers may delay vehicle purchases, he has not heard from dealers that there has been a significant change in vehicle sales yet, he said.
At McRee Ford in Dickinson, a suburb of Houston, dealer Mitchell Dale said if oil prices stay low, it will impact the economy and jobs in Texas, specifically in the Houston area, which could also lead to a slowdown in sales of high-margin pickups.
McRee Ford sells 100 to 120 new F-150s and F-250s each month. But Dale said traffic at the dealership seems to have slowed as coronavirus concerns increase and infections spread. As of Friday, March 13, there were at least 24 reported cases in Texas, according to the Centers for Disease Control and Prevention.
“We just have to be cautious and see how it plays out,” he said.
Houston is still viewed as the “energy capital of the world” since the 1980s oil bust, though its economy has diversified, according to dealer Steven Wolf of Helfman Dodge-Chrysler-Jeep-Ram, Helfman Fiat-Alfa Romeo-Maserati and Helfman Ford. Wolf estimated the dealership group sells about 150 full-size pickups each month.