The state budget prospects laid out recently by Texas Comptroller Susan Combs in the Biennial Revenue Estimate (BRE) were rosy, thanks to the natural gas and crude oil industries. Taxes from natural gas and oil increased 41 percent in fiscal 2012, triple the increases for total collections statewide. Only sales taxes produced more revenue for the general fund, according to the report. Statewide natural gas tax collections are expected to reach $1.5 billion in 2012-2013. Plus, over the next two years, the Texas legislature will have an estimated $101.4 billion available for general-purpose spending.

In the past, energy booms were fueled by high prices, but this boom is different. This time, we have low energy prices and high output, thanks to the combined technologies of horizontal drilling and hydraulic fracturing perfected in the Barnett Shale and exported all over the state, the U.S. and the world.

This situation is also making Texas an attractive place for energy-intensive industries to expand. Coal-fired power plants are being replaced with natural gas–fired plants. Dow Chemical and Chevron Phillips are building billion-dollar petrochemical refineries on the Texas Gulf Coast.

The Economic Stabilization Fund (ESF), also known as the Rainy Day Fund, has also benefitted from the boom. The state’s Rainy Day Fund is almost entirely generated from natural gas and oil tax revenues. In the last biennial budget, the fund was tapped by the legislature to help offset budget cuts in education and other state services; however, the fund has recently been replenished – thanks in part to natural gas and crude oil industries – and it is estimated to have a balance of $11.8 billion by the 2014-2015 biennium. 

There is so much natural gas being produced in Texas that a liquefied natural gas (LNG) export facility is being planned at the Freeport LNG plant on Quintana Island near Freeport, Texas. When construction of the terminal started in 2005, forecasts envisioned a major increase in LNG imports into the U.S. But with so much natural gas being produced out of the Barnett Shale, the Eagle Ford shale and the Permian Basin, the Freeport facility is being expanded to have an import/export terminal for natural gas. 

Overall, low natural gas prices and high crude oil production are creating greater tax revenue and giving the economy a good outlook for sustainable growth in the future.