Texas Business Report: Boom Goes the Housing Market
Built to the Brim
A boom in the Texas housing market is stretching homebuilders thin as they fight to keep up with exploding demand, Businessweek reported this week. Home prices in Houston and Dallas are “up more than at any time since the oil boom of the 1980s,” and the state saw a record number of residential sales in the second quarter of 2013. As more buyers flood into the market, the inventory of existing homes in those two cities will only provide three months of supply, compared to the national average of about five months.
The Bottom Line: Businessweek’s analysis finds that while other states are still recovering from the real estate collapse that began in 2008, Texas home prices held relatively stable and are now getting stronger. Nevertheless, the homebuilding industry “went into hibernation during the recession [and] awoke unprepared for a rebound.”
West Cite Story
The Occupational Safety and Health Administration has issued 24 safety citations to the owners of the West fertilizer plant that exploded in April, killing fifteen. The federal agency is accusing West Fertilizer Co. of violations including “unsafe handling and storage of explosive and flammable chemicals, missing labels on storage tanks, failing to pressure-test hoses, bad or missing valves, and failing to have an emergency response plan,” as well as providing inadequate training to employees, the New York Times reports. OSHA is also seeking a fine of $118,300 from the company, and other federal departments could eventually impose additional penalties.
The Bottom Line: Thursday’s announcement of the citations came from California Senator Barbara Boxer rather than from OSHA itself because the agency is closed due to the government shutdown, according to the Times.
How Do I Get You a Loan?
Texas’ largest electricity provider may be looking to borrow as much as $3.5 billion as it prepares to file for bankruptcy later this month. Dallas-based Energy Future Holdings Corp.—which has racked up more than $40 billion in debt since natural gas prices fell off precipitously starting in 2008—is seeking the loan from lenders including Citigroup, JPMorgan Chase, Bank of America, and Morgan Stanley, according to Bloomberg News.
The Bottom Line: Inside sources told Bloomberg the lenders will provide debtor-in-possession financing, which “may help reassure vendors, customers and regulators the company can meet its obligations.” Details on the arrangement could come out as early as next week.
Winner of the Week: TransCanada
Construction on the southern portion of the Keystone XL oil pipeline can move forward despite a legal challenge from several environmental groups, a federal judge ruled this week. The Associated Press reports The Sierra Club, Clean Energy Future of Oklahoma, and the East Texas Sub Regional Planning Commission had sought a court order to stop work on the project—which is expected to carry oil from Oklahoma to the Texas Gulf Coast—pending the outcome of an environmental lawsuit. A lower court denied the same request in 2012.
In upholding the ruling, the appeals court concluded “the groups couldn’t prove that potential environmental harm would surpass concrete economic harm” to the pipeline’s builder, TransCanada. The company claims it loses hundreds of thousands of dollars each day the project is delayed.
Loser of the Week: Schuepbach Energy
France will continue to enforce its nationwide ban on hydraulic fracturing, the country’s highest court ruled this week. Dallas-based Schuepbach Energy had sought to have the ban overturned after the French government revoked its drilling exploration permits, the New York Times reports. Noting environmental concerns about the controversial drilling technique, the Constitutional Council rejected the company’s claims that the 2011 ban “violated its rights, unfairly singled out fracking and was unconstitutional.”
Schuepbach and other American energy companies took an interest in France after industry experts estimated France holds 137 trillion cubic feet of technically recoverable gas, which is “equivalent to decades’ worth of national consumption,” according to the Times.