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June 16, 2015

Low Gas Prices Are Great for Vacationers But Not Everyone

Rental Housing
Low Gas Prices Are Great for Vacationers But Not Everyone

Summer vacationers can rejoice that gas prices are $1 lower per gallon than a year ago, but there is a downside for some parts of the country—like Midland, Texas, and Casper, Wyo.,—where energy-related jobs are an important part of their local economy.

Such smaller metropolitan areas are more likely to experience a more severe economic slowdown when gas prices are low, whereas larger metro areas are more diversified and can better absorb the potential losses from the oil & gas industries.

Among the MSAs with exposure to energy related industries, the most disposed to risk are the smaller MSAs that have a large concentration of oil & gas jobs and a low industry diversification index.

A Freddie Mac analysis highlights large and small markets with high exposure to the oil & gas industry.

Metro AreaOil & Gas Job ConcentrationIndustrial Diversification IndexMetro AreaOil & Gas Job ConcentrationIndustrial Diversification Index
Larger MSAs  Smaller MSAs  
Houston, TX 4.8% 0.59 Midland, TX 15.7% 0.08
Oklahoma City, OK 4.2% 0.70 Odessa, TX 12.3% 0.14
New Orleans, LA 2.5% 0.61 Casper, WY 11.0% 0.25
Tulsa, OK 1.9% 0.62 Lafayette, LA 9.8% 0.2
Dallas, TX 1.1% 0.80 Greeley, CO 8.8% 0.37
Denver, CO 1.0% 0.80 Farmington, NM 7.9% 0.21
San Antonio, TX 0.9% 0.81 Houma, LA 6.7% 0.07
Austin, TX 0.4% 0.67 Grand Junction, CO 5.6% 0.48
United States0.6%1.00      

For more details, see our full paper on how oil prices impact multifamily markets.

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