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Texas oil industry crafts plan for students to graduate debt free with 6-figure job

US adults carry an average student debt of $24K

42 percent say they regret taking out a student loan; Fox Biz Flash: 6/24.

The state of Texas is working on a plan that would allow college students to graduate debt-free with a job in the lucrative oil and gas industry.

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The program would help fill the hundreds of thousands of positions that will be needed in the coming years to develop the massive 2016 oil discovery in the Permian Basin, located in West Texas and New Mexico.

Texas is working with the Department of Energy and the Small Business Administration to use opportunity zones to “help train a workforce of rural Americans to be part of this new labor force,” Texas Railroad Commissioner Wayne Christian, whose agency oversees the state's oil industry, told FOX Business.

Opportunity zones, which were created as part of President Trump’s Tax Cuts and Jobs Act, are designed to allow certain investments in lower-income areas to receive tax advantages.

“We're trying to establish what are the techniques that need to be taught and how do we combine our four-year universities in,” he added. “What's interesting is that it's coming at the same time that I think higher education is realizing we've been producing a lot of kids graduating college without jobs that are in tremendous education debt.”

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The average annual tuition for in-state residents at a four-year college in Texas was $15,819 during the 2018-2019 academic year, according to CollegeCalc. A four-year education would cost $63,276 if costs held steady.

The four-year program in energy now in the works would give graduates the potential to earn "six figure incomes with no debt,” Christian said. Oil is a "tremendous industry," he said, and the program would give higher education "the ability to equip our kids.”

Department of Energy officials weren't immediately available to comment, and the Small Business Administration didn't respond to FOX Business’ request for comment.

The Texas oil industry has been bleeding jobs this year as stay-at-home orders meant to slow the spread of COVID-19 caused a global drop of 30 million barrels per day in oil demand at the same time Saudi Arabia and Russia battled over output.

The result was a plunge in prices that briefly sent West Texas Intermediate crude oil below zero, forcing some producers into bankruptcy and causing many more to trim their workforces.

While prices have since begun to rally, the industry lost 26,300 jobs in April, the largest monthly decline since recordkeeping began in 1990, according to the Houston Chronicle. Total losses tied to the pandemic will reach 1 million job-years, according to Perryman Group, a Waco, Texas-based economic insight firm.

A job-year is the equivalent of one person working for a year, but can be broken down into multiple people working parts of a year.

“We're not putting lipstick on a hog,” Christian said. “This is not a great time for the oil and gas industry, a lot of people have been laid off. But right now, we are in recovery. That's the good news.”

TEXAS FEARS LOSING OIL-RICH LANDS IN CHINESE TAKEOVER OF WEAKENED ENERGY COMPANIES

The industry was suffering through a labor shortage before the pandemic due to what Christian called “tremendous fines” that have been placed on industry giants over the years and “half-truths” about oil’s impact on the environment.

The six major pollutants regulated by the Environmental Protection Agency have decreased by 71 percent since 1970. At the same time, U.S. GDP has soared by over 1,800 percent and the country’s population has grown by 61 percent.

Transportation for the swelling population is increasingly reliant on fossil fuels produced at home, a sharp turnaround from the late 20th century, after the advent of shale-fracturing opened a wealth of petroleum resources in North America.

The 2016 discovery in the Permian Basin alone unearthed an estimated 230 billion barrels of oil and trillions of cubic feet of natural gas, increasing total U.S. reserves by a magnitude of almost nine times.

And on the other side of the state, in Mont Belvieu, 30 miles east of Houston, sits the largest salt dome in the world, which contains enough liquefied petroleum to fill tanks all the way to San Diego, California.

Petroleum giant ExxonMobil and plastics manufacturer Inteplast are two of the companies located in Mont Belvieu, and, according to Christian, they are “begging for as many employees as they can possibly get.”

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Not only will the jobs that were lost during the downturn need to be replaced, but many already in the industry will need to be retrained for new technologies that will make operations more efficient and ensure the price of a barrel of oil won’t need to be as high as before for companies to be profitable.

“In Texas and America, we've been through downturns time after time for a lot of different reasons and every single time America has come back stronger and more resilient and more diversified than we were before,” Christian said.

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Business

Texas Virus Surge Deals State a Hit With Sales Taxes Plunging

In Texas, one of the few states without an income tax, more than half the government’s revenue comes from its cut of what residents spend in stores, restaurants and bars.

But with the coronavirus raging, bars shuttered and nearly 2 million residents out of work, the state’s sales-tax revenue is tumbling, leaving the government poised to draw down the savings it built up when the economy was still booming.

“This is going to be a much longer lasting impact than I think most have originally anticipated,” Texas Comptroller Glenn Hegar said in an interview

Texas is among states that are being hit hard by the swift collapse of the economy, which turned a record-long expansion into a deep recession virtually overnight. With high unemployment and business closings cutting into tax collections, states are facing budget shortfalls of some $435 billion through 2021, exceeding those left after the last contraction over a decade ago, according to the Center on Budget and Policy Priorities.

Texas’s sales-tax collections in June dropped 6.5% from a year earlier to $2.7 billion, Hegar said in a statement on Wednesday. That follows a 13.2% drop in May, which was the steepest decline since January 2010. Most of the June sales tax revenue is based on purchases made in May and remitted to the state a month later.

“I think the legislature knows that we’re dealing with a significant contraction, obviously the state economy, national economy, global economy,” said Hegar, who estimates that the state will have about $8.5 billion of savings to draw from when the next legislative session begins in January. “The virus doesn’t care if you’re a blue state, red state or purple state.”

Eva DeLuna Castro, a state budget analyst at Every Texan, an Austin based research organization, said that the summer usually brings conference goers and tourists to Texas, bolstering spending at hotels and restaurants. That revenue has nearly evaporated and low levels of consumer confidence may mean it will be years before Texas’s revenue returns to pre-pandemic levels.

“Consumer confidence is way down and then people won’t be buying cars and goods and clothes — they’ll wait on all of that,” she said. “They won’t have a vacation or spend money that is discretionary, and those are the things that our tax system gets at.”

Texas passes a biennial budget during the legislative session in odd numbered years, meaning the process will begin in January for the 2022-2023 biennium.

Governor Greg Abbott, a Republican, has already asked state agencies and higher education institutions to draw up 5% reduction plans.

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World News

In Hot-Spot States, Those Seeking Tests Meet Long Lines, Delays

The U.S. is again grappling with a shortfall of testing that has hobbled the nation since the pandemic’s early weeks, and now threatens to further undermine containment efforts at a crucial moment.

In new hot spots like Arizona, Texas and Florida, where Covid-19 is rapidly spreading, lines for testing extend outside of urgent-care offices and other sites. Two high-school football stadiums in Houston regularly hit capacity by mid-morning and have to turn people away.

The country’s largest labs are forecasting a surge in demand that could lead to longer waits for test results, and have warned that limited amounts of critical testing supplies could become a constraint. Though capacity has expanded, widespread testing remains elusive, in part due to persistent supply shortages.

“We are still grossly inadequate. We’re so far behind,” said Howard Forman, director of the Yale School of Public Health’s health-care management program. “We still have a supply issue, and then we had a demand issue. You have both issues playing out. At the federal, state and local level, you need both those things addressed.”

The testing dearth comes months into a public-health crisis in which, absent a vaccine, Covid-19 screenings have become the first line of defense. Reopening states only turned up the pressure, boosting demand for testing as Americans increasingly went back to work, ate out, got haircuts and gathered socially.

The surge in cases has forced states to reconsider their reopening efforts. New Jersey Governor Phil Murphy on Monday paused plans to restart indoor dining on July 2. New York Mayor Bill de Blasio and New York Governor Andrew Cuomo also said skyrocketing cases in the South and West have prompted them to consider postponing dining’s return. U.S. virus deaths have exceeded 125,000 out of more than 2.5 million reported cases.

The pause in reopening was endorsed by Larry Kudlow, the top White House economic adviser. And Senate Majority Leader Mitch McConnell on Monday joined Vice President Mike Pence in encouraging the public to wear masks. On Tuesday, top federal health officials including infectious-disease expert Anthony Fauci are expected to appear at a Senate committee hearing to discuss efforts to get back to work and school.

Worldwide, deaths have surpassed 500,000. The World Health Organization said “the worst is yet to come” as some countries see a resurgence of cases. Half the deaths are coming from the Americas.

The shortfalls in U.S. testing availability highlight the Trump administration’s failure to execute a cohesive national strategy. The burden shifted to states, which were provided some testing supplies in May and but have been told only limited amounts are available thereafter.

The U.S. processed about 557,000 tests each day, on average, over the last week, according to the Covid Tracking Project. Given the size of the current U.S. outbreak, 2 million to 4 million tests a day would be needed “to do something to really wipe it out,” Forman estimated. “We’re not really close to that.”

In Texas, which is quickly becoming the new U.S. epicenter, the strain from increasing testing demand was felt by hospitals, public-health departments and patients alike. Houston Mayor Sylvester Turner said capacity at the Delmar and Butler stadium sites will be expanded by 30% starting Tuesday.

A line that started before 5 a.m. Sunday at an urgent-care center in South Austin was compared to the wait for a wristband to Austin City Limits, the city’s annual music festival, or the queue for barbecue at Franklin’s, which would draw dozens customers to its doors before sunrise.

Kaitlin Heikes, a 26-year-old San Antonio resident, had to drive 45 minutes to Spring Branch for a rapid test. She made an appointment on Sunday for the following day after she didn’t have any luck on Friday or Saturday.

At the Houston Methodist hospital system, demand for testing doubled over the last week or so, David Bernard, medical director of clinical pathology, said in a Friday interview. The lab has faced an uphill battle securing supplies, and equipment is needed after diagnostics companies initially prioritized early hot spots like New York.

“We’ve been stretched,” Bernard said. Test manufacturers “don’t give you as much as you want, and it’s been a struggle. We’ve had to work as hard as we can to get things done.”

Covid cases are on the rise in Harris County, home to sprawling Houston, which for a time had been able to meet demand, said Umair Shah, executive director of Harris County Public Health.

‘Not Enough’

“We’re doing everything we can to meet or increase capacity,” Shah said in an interview. “But it is not enough right now.”

A local Texas health department was still receiving test results by fax as recently as last week, slowing them down further, said David Lakey, UT System’s vice chancellor for health affairs and chief medical officer and the former commissioner of the Texas Department of State Health Services.

“If we had today 6,400 new cases and you have that kind of volume each day, there isn’t possibly a way for the staff of the local health departments” to do contact tracing, he said. “They are getting overwhelmed right now.”

California has experienced delays, too. Barbara Ferrer, who directs Los Angeles County’s health department, said in an interview that some testing centers can take a week to report results, also creating problems for contact tracing. At that point, those who test positive will have had days to go around infecting more people before the county can talk to them and the people around them, Ferrer said.

In Florida, hundreds of cars have been lining up at test centers. Health officials said wait times could be up to four hours on Monday at the Hard Rock Stadium site serving the Miami metropolitan area, and the Orange County Convention Center site in Central Florida had waits of about five hours. In St. Petersburg, local police said a site at Tropicana Field ran out of tests only about an hour due to “overwhelming turnout.”

“The testing capacity is disappointing,” St. Petersburg Mayor Rick Kriseman wrote in a tweet. “We are working with the state to bring additional, expanded testing.”

— With assistance by Joe Carroll, David R Baker, Jonathan Levin, and Rachel Adams-Heard

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