Texas Business Review Published by the Bureau of Business Research, University of Texas at Austin Charles C. Holt , Director Lorna Monti, Associate Director The Authors E. Victor Niemeyer Research Associate Center for Energy Studies University of Texas at Austin Stephen L. McDonald Professor ofEconomics University of Texas at Austin Charles P. Zlatkovich Research Associate Bureau of Business Research Charles H. Wurtzebach Assistant Professor of Real Estate and Finance University of Texas at Austin Cover: Photograph by Jeanne Somers, journalism student at the University of Texas at Austin. Staff Lewis J. Spellman, J::ditor Lois Glenn, Publications Manager Mildred Anderson and Marylyn Donaldson, Data Compilation Daniel P. Rosas, Printing Coordinator Joan Farnham, Compositor Shirley Ritz, Manuscript Ty pist James R. Buchanan, Graphic Artist Vol. LI, No. 10, October 1977 217 Recent Income and Employment Trends in Texas, E. Victor Niemeyer 220 Energy Policy and the Price System, Stephen L. McDonald 225 Air Travel Patterns and Regional Orientation, Charles P. Zlatkovich 232 Texas Building Permit Fluctuations in the Seventies, Charles H. Wurtzebach Tables 217 Total Disposable Personal Income for the Five Largest Income-Producing States and the United States, 1969 and 1976 218 Per Capita Personal Disposable Income for the Five Largest Income-Producing States and the United States, 1969 and 1976 219 Oil and Gas Drilling Footage in Texas, January through May, 1976 and 1977 229 Number of Principal Interactions, 1960-1975 229 Regional Hierarchy, 1960-1975 231 Top Three Interaction Partners, 1975 233 Texas Residential Construction, 1970-1977 234 Relation of Apartment Authorizations to Total Authorizations and One­and Two-Family Authorizations to Total Authorizations, 1970-1977 234 Estimated Values of Building Authorized in Texas 235 Local Business Conditions 236 Selected Barometers of Texas Business Barometers of Texas Business (inside back cover) Charts 218 Growth in Labor Force and Employment in the Combined Dallas-Fort Worth and Houston SMSAs as a Percentage of Total Growth in Labor Force and Employment in Texas, 1972-1977 219 Percentage Changes in Drilling Footage for Texas Railroad Commission Districts, 1977 from 1976 226 Primary Air Passenger Traffic Flows, 1975 227 Primary Air Passenger Traffic Flows, 1960 228 Gravity Model Principal Interactions, PP/D2 230 Gravity Model Principal Interactions, PP/D 231 Top Three Air Passenger Traffic Flows from Points in Texas and Adjoining States, 1975 231 Top Three Air Passenger Traffic Flows to Points in Texas and Adjoining States, 1975 233 New Residential Building Authorized in Texas Subscription rate: $5.00 per year. Single copy : $.SO. Address requests to Publications Office, Bureau of Business Research, P.0. Box 7459, Austin, Texas 78712. Second-class postage paid at Austin, Texas. Publication number 540-400. Contents of this publication not copyrighted and may be reproduced freely . Acknowledgment of the source will be appreciated. Texas Business Review is indexed in Marketing Information Guide and Public Affairs Information Service and is available on microfilm from University Microfilms. The Bureau of Business Research is a member of the Association for University Business and Economic Research. Recent Income and Employment Over the past seven years total personal income has grown more rapidly in Texas than in the United States as a whole. Despite a slowdown in 1976, recent estimates of personal income indicate that relatively faster growth rates again prevail in Texas, and even during the 1976 slowdown Texas income growth rates matched those of the nation. The employment gains that have recently been achieved are focused in the SMSAs of Texas, particularly in Houston and Dallas-Fort Worth. Personal income-the total of wages and salaries, inter­est, dividends, rents, income from unincorporated enter­prises, and government transfers-is a broad measure of economic activity at the state level. For the first six months of 1977, personal income in Texas was estimated by Business Week (August 15 , 1977) to be about 11.9 percent higher than for the same period in 1976. Nationally, the increase was 10.7 percent. Not only is Texas personal income growing faster than national personal income, the percentage increase in Texas this year is the largest among the top five income-producing states, which are California, New York, Illinois, Texas, and Pennsylvania. Of these five, only Texas and California have personal income growth rates higher than the national growth rate. This trend is not confined to 1977. From the beginning of 1975 to the end of 1976 Texas was one of the fastest-growing states in terms of personal income. Within that overall figure Texas farm income jumped 86.6 percent, while U.S. farm income rose only 6.4 percent. This unusually high rate of growth in farm income cannot be expected to continue. Increases in total wages and salaries in manufacturing, construction, and trade and services were all above average in Texas. However, from the Trends in Texas E. Victor i ierneyer beginning of 1976 through the first quarter of 1977 Texas growth slowed to the national rate of increase, and wages and salaries in manufacturing of durable goods increased less rapidly in Texas than in the nation. Only in construc­tion and mining and services were the increases above the national figures. It appears now that Texas has resumed its faster growth rate. Using personal disposable income (personal income less personal income taxes) as a measure, one can see that Texas has done very well over the last seven years. The annual growth rate for Texas was 11.4 percent, while the growth rate for the United States was 9.3 percent. The other four of the five largest states generally grew much more slowly than did the nation as a whole. Only California matched the national rate at 9.3 percent. New York was the slowest­growing of the top five at 7.3 percent. Total Disposable Personal Income for the Five Largest Income-Producing States and the United States 1969 and 1976 (Billions of dollars) Average annual rate of growth State 1969 1976 (percentage) Texas 31.8 67.9 I 1.4 California 71.2 132.4 9.3 lllinois 40.0 71.S 8.7 Pennsylvania 37.3 66.1 8.5 New York 66.3 108.3 7.3 United States 636.6 1,187.8 9.3 Source: U.S. Department of Commerce. This relatively faster growth rate is based on rapid population growth as well as an increase in per capita disposable income relative to the United States. From 1969 to 1976, per capita disposable income in Texas increased• from 91 percent to 98 percent of the national figure. Labor Force and Employment The positive economic picture in Texas is also reflected in employment data. Employment in Texas was up in June by 0.4 percent from May and up 2.7 percent from a year earlier. Total employment increased by 20,900 from May to a total of 5 ,439 ,900 in June, the highest ever recorded. With the closing of schools for the summer, the labor force increased by 60 ,300, leading to a seasonal increase in unemployment of 39,400. While the unemployment rate was up in mid-June to 5 .4 percent from 4.8 percent in mid-May, it was down from a rate of 6.4 percent a year earlier. Nonagricultural wage and salary employment was up by 16,400 from May to June with half the increase taking place in the manufacture of durable goods. The rest of the increase could be split evenly between an increase in employment in nondurable goods manufacturing and a net increase in nonmanufacturing employment. The durable goods industries showing the largest employment increases from May to June were machinery, except electrical; electric and electronic equipment; transportation equip­ment; and lumber and wood products. Increases in employ­ment in the manufacture of nondurable goods were spread among apparel and other finished textile products, chem­icals and allied products, and petroleum refining. The relatively small net increase of 4 ,300 in nonmanufacturing employment can be attributed to large gains in oil and gas extraction, construction, transportation and public utilities, wholesale and retail trade, finance, insurance, and real estate, and services, gains that were offset by large declines in educational services and employment by state and local government. The June 1976 to June 1977 increases in nonagricultural wage and salary employment reflect a different pattern from the May-to-June increases. For the year ending in Per Capita Personal Disposable Income for the Five Largest Income-Producing States and the United States, 1969 and 1976 (Dollars) Average annual rate of growth State 19 69 1976 (percentage) Texas 2,882 S,4 37 9 .S Illinois 3,624 6,369 8 .4 Pennsylvania 3, 178 S,S69 8. 3 Ca liforn ia 3,613 6,1 SS 7.9 New York 3,662 S,989 7 .3 United States 3,1 62 S,S34 8.3 Source: U.S. Department of Commerce. June the sector with the largest increase was services (38,800), particularly business and repair services (15,500), and health services (11,700). The second greatest increase came in the government sector (21,700), almost entirely in employment by local government. The other increases were in manufacturing of durable goods (16, 100), wholesale and retail trade (14,600), oil and gas extraction (13,600), finance, insurance, and real estate (10,000), transportation and public utilities (7,600), manufacturing of nondurables (6,900), and construction (5,400). The small role of construction in accounting for employment increases is surprising, given its past role as a leading sector in the growth of personal income. A large portion of the growth in Texas employment and virtually all of the growth in the labor force from June 1976 to June 1977 was concentrated in two SMSAs, Houston and Dallas-Fort Worth. During this period, em­ployment in the state increased by 142,600, while the increases for Houston and Dallas-Fort Worth were 76,800 and 44,500 respectively, for a combined gain of 121,300 or 85 percent of the state total. The increase in the civilian labor force for the state was 95,100, while for Houston and Dallas-Fort Worth the increases were 65 ,600 and 30,300 for a combined sum of 95 ,900 or 800 above the state total. The other 23 Texas SMSAs had combined gains of 25,000 in employment and 13,700 in the civilian labor force, which implies a decrease of 3,700 in non-SMSA employ­ment and a decrease of 14,500 in the non-SMSA civilian labor force. June labor force growth and employment growth in the Dallas-Fort Worth and Houston SMSAs were higher than Growth in Labor Force and Employment in the Combined Dallas-Fort Worth and Houston SMSAs as a Percentage of Total Growth in Labor Force and Employment in Texas, 1972-1977 Q) Cl ~ c: Q) "a; 0.. Source: Derived from Texas Employment Commission labor statistics. TEXAS BUSINESS REVIEW usual in relation to the rest of the state. These two SMSAs accounted for over half the growth in labor force and employment in the state from 1972 through 1976 and much more than that in the first half of 1977. During this period the Dallas-Fort Worth SMSA grew at about the same rate as the whole state, while the Houston SMSA grew much faster than the state. Among Texas SMSAs Houston had the most rapid growth in resident employment from the previous year, 7.0 percent. Houston was followed closely by Galveston-Texas City (5 .8 percent), Lubbock (5 .5 percent), and Tyler (5 .0 percent), and less closely by Sherman-Denison (3.9 per­cent), Dallas-Fort Worth (3.7 percent), San Angelo (3.3 percent), and Austin (3.0 percent). The state increase for this period was 2. 7 percent. El Paso had the largest decline in employment, 2.6 percent, mostly in the manufacturing sector. Construction employment in El Paso, however, is up and is expected to rise further in September. Beaumont­Port Arthur-Orange had the second largest decline in employment, 1.5 percent. Mining Mining, primarily oil and gas extraction, is one of the key sectors of the Texas economy responsible for above average growth in Texas. Since 1971 oil production has been in almost constant decline, though lately the rate of decline has slowed somewhat. While declines in oil and gas production have important implications for tax revenue to the state government and royalty income for individuals, they have little impact on employment. Economic activity in oil and gas extraction centers around drilling, which is only loosely associated with current production. For this reason, the effort spent in searching for oil in Texas has a bigger direct impact on the Texas economy than does the quantity produced. This is especially noticeable in employment, where the mining sector accounted for only 3 percent of nonagricultural employment in June but 10 percent of the increase in total Oil and Gas Drilling Footage in Texas January through May, 1976 and 1977 Total footage d rilled (thousands of feet) Texas Railroad Percentage Commissio n District 1977 1976 change I. So uth Central 3,183 2,347 35.6 2. Middle G ulf 2,089 2,263 - 8.3 3. Upper G ulf 4. Lower Gulf-SW 3,828 3,635 3,296 3 ,069 16.1 18.4 5. East Central 60 1 340 76.8 6. Northeast 1,3 19 1,198 IO. I 78. North Central 4,290 3 ,733 14 .9 7C. West Central 3,042 2,499 21.7 8. West 7,397 7 ,613 - 2.9 9. North IO. Panhandle 2,628 1,764 2 ,329 2 ,038 - 12.8 15.5 Offsho re 1,443 618 133.5 Source: " Industry at a Glance," World Oil 184 (July 1976): 21-22, and 185 (July 1977): 20-21. OCTOBER 1977 employment. The boom in the oil and gas extraction industry in Texas is based on the increase in drilling. One measure of drilling activity is the number of rotary rigs being used. Rotary rig activity increased rapidly in both Texas and the United States after 1971, accelerating after 1973 but slowing down during 1976. From 1971 to 1976 the average annual rate of increase was 1 7.5 percent in Texas and 11.2 percent in the United States. The high rate of growth in Texas implies that despite declining current production, Texas is still a profitable place to drill for oil and gas. While the rate of increase in drilling activity in Texas tapered off in 1976 to 2.5 percent and the national rate actually declined, drilling activity jumped in the first half of 1977. On the first of August 790 rotary rigs were active in Texas, up 24 percent from a year earlier. If that rig level is maintained, more rotary rig activity will take place in Texas in 1977 than in any other year since 1957. For the first five months of this year another measure of drilling activity, total footage drilled, was up 12.4 percent from last year's total. The biggest increases in drilling footage were Offshore (134 percent), East Central-Texas Railroad Commission (TRC) District 5 (77 percent), and South Central-TRC District 1 (36 percent). Declines occurred in the Panhandle-TRC District 10 (-15.5 per­cent), the Middle Gulf-TRC District 2 (-8.3 percent), and West Texas-TRC District 8 (-2.9 percent). Oil and gas extraction activity has been important to the Texas economy in the past, and the recent surge in drilling activity assures its continued importance in the immediate future. Percentage Changes in Drilling Footage for Texas Railroad Commission Districts, 1977 from 1976* 10 -15.5% • Penod reflected is January through May of each year. Source: " Industry at a Glance," World Oil 184 (July 1976): 21·22, and 185 (July 1977): 20·21. Energy Policy and the Price System Stephen L. McDonald The growing dependence of this country on imported oil, the oil em­bargo of the winter of 1973-1974, the quadrupling of oil prices and the sympathetic rise in coal and gas prices imposed by the OPEC oil cartel, the growing shortage of natural gas, and the environmental problems associated with attempts to substitute coal for oil and gas are all manifestations of what is often called an energy crisis. Al­though certain of these developments were artificially imposed, they have had the healthy effect of forcing us to recognize that the world has reached a stage of development beyond which the real labor and capital costs of energy from the conventional fossil sources must progressively rise. In the future we must use sparingly the re­sources we have left and base the future energy economy on relatively inexhaustible or renewable sources. To reach the point at which we are able to conserve exhaustible resources and rely more on inexhaustible or renewable resources, we must adopt a comprehensive energy plan. An op­timal energy policy for the United States would have to include seven key elements: primary reliance on the price system to ration scarce goods and provide incentives to production, security of supply, neutral taxation, environmental protection, conserva­tion, continued government support of basic energy research and develop­ment, and rational leasing of public lands. Primary Reliance on the Price System In a free, competitive market econ­omy the price of each good tends to equate the supply of and demand for it in such a way that marginal benefit equals marginal cost. Consumers push purchases to the point at which the last unit bought yields a benefit just equal to the price; producers push output to the point at which the last unit produced costs an amount just equal to the price. Thus where mar­ginal benefit equals marginal cost, the excess of total benefit over total cost is maximized. The free competitive price system tends to maximize wel­fare, given total resources and the distribution of income. As changes occur in costs, tastes, and incomes, supply and demand in each market shift, producing different prices that equate marginal cost with marginal benefit. Indeed, in a dynamic economy, prices are continually chang­ing in relation to one another, and resources are continually being reallo­cated among industries. If the demand for a good increases, its price tends to rise, checking the rise in consumption and attracting additional productive resources to the industry in question until at a higher output marginal cost once again equals marginal benefit. If the cost of producing a good increases, resources are repelled from the indus­try, output falls, and consumers re­duce purchases of the good until mar­ginal benefit once again equals margin­al cost. In each new (and temporary) "equilibrium" of supply and demand , output and consumption are at the maximum level consistent with every unit of each good being worth at least as much as it costs. Thus the price system in competitive markets is an efficient, decentralized mechanism (which allows maximum freedom of choice) for continually reallocating resources and adjusting consumption to maximize welfare. Expected future prices play a most important role in the efficient alloca­tion of resources, particularly exhaust­ible resources such as gas and oil. A rise in expected future prices induces not only an increase in present explo­ration for new deposits, but also a decrease in present production by owners of existing deposits. Thus as oil and gas become more and more expen­sive to find and producers anticipate higher and higher prices, operators find that it is in their own interest (and that of the society) to conserve existing reserves now in order to recov­ er them later, when they will be more valuable. In other words, under the proper regulatory conditions the price system is an efficient instrument of natural resource conservation. The foregoing discussion suggests that welfare would be increased and conservation of scarce oil and gas would be encouraged if oil and gas prices were freed from regulation. Without regulation , the price of gas would rise at once. The projected price of gas would be higher still, reflecting the expectation of growing scarcity relative to demand. Domestic oil prices would rise to equal the delivered price of imports, which might be expected to rise in the future as demand grew and world reserves fell. Higher prices would increase the producers' incen­tive to explore in previously uneco­nomical places, to drill deeper, and to develop leaner deposits, as well as to conserve existing supplies. At some early point, shale oil production would become economical, and thereafter it would expand. Similarly, if prospec­tive oil and gas prices rose high enough, coal liquefaction and gasifi­cation would become viable and grow­ing industries. Supplies would thus be bolstered, yet consumers would have growing incentive to cut back on the use of oil and gas, to invest in energy­saving houses, heating and cooling equipment, and automobiles. And they would turn to substitute sources of energy, such as solar power, as the costs of these sources fell relative to the costs of oil and gas. Particularly in utility and industrial uses, coal would be progressively substituted for oil and gas, despite the necessity of heavy investment in equipment to protect the environment. Thus the energy economy would gradually, but steadi­ly, be transformed. During this trans­formation we could make the most of our remaining fossil resources by stim­ulating exploration but encouraging more economic use and progressively shifting to nonfossil sources of energy. The alternative to primary reliance on the price system to induce and guide this transformation is recurring short­ages of this or that fuel, occasional rationing, administrative allocation among regions, a heavy burden of bureaucratic controls, great investor uncertainty, and massive reduction of consumer welfare. Security of Supply The oil embargo of the winter of 1973-1 974 brought home to us the fact that the oil supplies that we import -increasingly from the Middle East-are insecure. Under such circum­stances, the usual efficiency argument for free trade must be qualified. The market price of imported oil does not reflect all its costs when the probabil­ity of occasional supply interruption is figured in. The costs attached to such a probability include loss of real prod­uct from fluctuations in input avail­ability, loss of freedom in foreign policy from threatened interruption of supply, and reduced defense capability from actual or potential seizure of producing areas by an enemy. These costs, weighted by their probability, should be added to the delivered price of imported oil if we are to have, through the working of the price system, the most efficient combina­tion of domestic production and im­ports. The most obvious and direct way to add the extra cost of imports to their delivered price is to impose a tariff on them. This would raise directly the delivered price of oil from abroad and indirectly , through attempted substitu­tion effects, the free price of domestic oil to the same level. The latter in­crease would stimulate domestic ex­ploration and development and would lead eventually to a higher proportion of domestic consumption being sup­plied from domestic sources. Consum­ers would be motivated to economize on oil use and to substitute other fuels. Thus in two ways our depen­dence on insecure supplies would be reduced. The benefit of a tariff could be enhanced, or the same benefit ac­quired at a lower cost , if the proceeds of the tariff were used to finance the acquisition and maintenance of a stored reserve of oil to be drawn upon in the actual event of a supply inter­ruption. The Energy Policy and Con­servation Act of 197 5 provides for the establishment of such a reserve (about ninety days worth of imports), but the reserve is to be financed out of general revenues. If such a reserve were fi­nanced by a tariff, the consumers of oil would bear the full costs of con­sumption and would choose between oil and substitutes more judiciously. Neutral Taxation On the assumption that in the absence of any tax the allocation of resources among industries would be optimal-that is, in each industry mar­ginal resource cost would equal mar­ginal consumer benefit-taxes ideally should be neutral with respect to the allocation of resources. We should not pletion allowance for major producers of oil and gas has been abolished, abolition of the allowance for other minerals also) would be beneficial. With greater neutrality, our choices of fuels in the future would be less biased and less likely to reduce consumer welfare. It should be noted here that since OPEC was effectively setting the world and U.S. free price of oil, the elimina­tion of percentage depletion for major oil and gas producers in 197 5 could not have directly caused higher domes­tic prices. Elimination of the allow­ance did result, however, in less active searches for domestic oil and gas and must in time reduce domestic supply, if it has not done so already. The of the environment. These range from the pollution of fresh water with waste brines produced in association with oil to the destruction of soil and scenery by strip mining; from the pollution of air with the fumes and smoke of burning high-sulphur coal to the de­struction of stream life with waste heat from nuclear reactors. The costs of these damages should be borne in the first instance by the industries causing them; ultimately the costs should be reflected in the prices we pay for the goods produced by these industries. Otherwise, production and consumption of the goods in question would be pushed beyond the point where marginal cost equals marginal benefit (profit-maximizing firms will Ultimately the costs of environmental damages should be reflected in the prices we pay for goods produced by the industries causing the damages. by differential taxation add artificially to the relative cost of some goods and reduce the relative cost of others; to do so is to cause the marginal substitu­tion of the artificially cheapened goods for those whose real resource costs are lower. Historically we have not pursued a neutral tax policy in regard to energy sources. Percentage depletion allow­ances, accorded to fossil energy re­sources (and other minerals) generally, have been unequally applied among fossil energy resources. The oil and gas depletion allowance was first 27.5 percent of gross income, later was 22 percent, and now is 0.0 percent for large integrated oil companies, while the rate for coal has been fixed at 10 percent and for shale oil, 15 percent. Such depletion allowances resulted in lower prices for energy resources-at least until OPEC pegged the world price of oil at its own artificial level­and in greater consumption of them, especially oil and gas, than would have been the case with strictly neutral tax treatment. Equalization of percentage depletion rates (or, now that the de­consequence is greater reliance on im­ports than would have been the case if percentage depletion had been re­tained for all oil and gas producers. Thus the size of the tariff necessary to reduce imports to desirable levels is larger in the absence of percentage depletion. If we do adopt a tariff policy to control imports, the elimina­tion of percentage depletion for major oil and gas producers will have raised indirectly the domestic price of oil and, through substitution effects, the prices of coal and gas too. Environmental Protection The free price system tends to yield an optimal allocation of resources if, among other things, all external costs of producing goods and services are internalized and reflected in the prices of the relevant products. In connec­tion with the production and use of the major energy sources, significant externalities exist in the form of envi­ronmental damages or, more properly, damages to people through alterations always push production to the point where marginal internal costs equal marginal benefit as measured by price). External costs such as environmen­tal damage may be internalized in several ways. Firms may be prohibited from producing on certain sites so that they are forced to rely upon less profitable locations. They may be re­quired to install equipment that pre­vents environmental damage, to cor­rect damage unavoidably done (such as restoring top soil and vegetation fol­lowing strip mining), or to compensate those injured for damages done. And finally, firms may be taxed on the basis of environmental damage done, the tax rising with the extent of damage. Not all of these approaches are feasible in all situations, but at least one of them is feasible in a given situation. The oil and gas industry has a long history of preventive regulation, with emphasis on well-casing require­ments, waste disposal, and installation of special equipment to prevent oil spills at the wellhead. There is a shorter, but significant, history of cor-rective regulation involving land resto­ration after strip mining and cleanup of oil spills. Experiments with taxing smokestack emissions have been tried, and taxation may be a form of com­pensation to whole communities when damages are extensive. Some states would prefer to prohibit offshore oil drilling. The greatest difficulty in taxation and compensation schemes is the mea­surement of damages in pecuniary terms. Assessment of damage done to property with definite market value may be relatively easy. When in tangi­bles are involved or human life lost, the problem is more difficult. Even when measurement is easy, continuous monitoring over an indefinite period must be carried on in some cases (e.g., smoke emissions), at great administra­tive expense. Although it is theoreti­cally preferable to "put a price on" environmental damages and to allow affected firms to choose the cost minimizing combination of preven­tion, correction, and compensation, the second-best solution of regulatory prevention or correction is often the only one feasible. In any case we must face the fact that almost every kind of production alters the environment, and our pur­pose cannot be to prevent such alter­ation at all costs. Rather, our purpose should be to impose the social cost of environmental damage on the firms responsible so that their products will sell at prices that reflect all costs. Products that involve great damage would thus sell at high prices that would limit consumption. Products that involve slight damage would sell at lower prices, and consumption of these products would be higher. Thus consumers' responses to relative price inducements would lead to less dam­age. Internalizing environmental dam­age costs makes the price system work for environmental protection. Conservation We are concerned with the conser­vation of depletable natural resources, primarily oil, gas, and coal. By conser­vation of such a resource I do not mean the mere prevention of physical waste in its mining and preparation for use, nor do I mean the deliberate reduction of consumption below the point where marginal benefit equals price. Rather, by conservation I mean a manner and time distribution of extraction and use to maximize the value of the resource at any given time. Such a definition implies the prevention of all true wastes, including the extraction and use of some part of the resource at a time when its net value after extraction costs would be less than its discounted net value at some future time. It also implies that conservation is a dynamic problem, with the time distribution of use con­tinually changing as the relationship of present to future costs and prices changes and, of course, as the rate of interest changes. In the case of solid energy sources, such as coal or oil shale, conservation need not be a public problem if the extractive industry and capital markets are reasonably competitive. Presum­ably, profit-motivated miners seek to maximize the value of their property, and they are as good at predicting future costs and prices as public offi­cials. But oil and gas, which are fluid and move readily through the porous rock in which they are deposited, cause a problem because of multiple ownership of extraction rights in a given reservoir, the "rule of capture" as the law of ownership in produced oil and gas, the fluid nature of the resource, and the pressure-differential method of production. This combina­tion of circumstances makes it possible for one owner to capture oil or gas from his neighbor's property by dril­ling more wells and producing them at a faster rate than his neighbor. If any given owner attempts to delay produc­tion to some future date, he only succeeds in losing part of his property to his neighbor. So there is a tendency for all producers to extract oil and gas as rapidly as possible without regard to the future or to the fact that rapid extraction tends to reduce the amount of oil ultimately recovered from the reservoir. The obvious solution to this prob­lem is for the individual owners in a common reservoir to pool their inter­ests, sharing costs and revenues pro rata, and to operate the reservoir as a unit. Every owner knows this, but for reasons ranging from ignorance to structural advantage in the status quo, individual owners may feel they have more to gain from nonunitized opera­tion. Consequently, it is very difficult to gain l 00 percent voluntary agree­ment of reservoir owners; it is almost never done except for purposes of secondary recovery after the reservoir pressures are so spent that the holdout has little to gain from independent behavior. It is clear that some degree of regulatory compulsion is required if oil and gas reservoirs are to be oper­ated, universally, as units with free­dom for operators to choose the pro­duction rate.* The states that have jurisdiction outside the public domain and the outer continental shelf have chosen not to take this approach but rather to regulate production directly with a view to preventing physical waste. The federal government has generally fol­lowed the lead of the states and since 1970 has restricted production on the outer continental shelf to the rate consistent with no significant loss of ultimate recovery. The federal govern­ment does have the power under exist­ing law, however, to compel unitiza­tion of oil and gas reservoirs in its jurisdiction, and a number of sources are urging the use of this power. If the federal government acted in this way, the states might in time follow . The result would be for the industry to maximize more nearly the value of oil and gas resources-given reasonably competitive prices-with incentive to shift production from the present to the future when expected future val­ues rise relative to present ones. In short, the price system would promote conservation in oil and gas production as in hard minerals production. Government Support of Research and Development Research and development expendi­tures are investments, of course; as with other investments, most of them are properly left to private enterprise. In some important cases, however, private enterprise cannot be expected to make the optimum amount of research and development investments from the point of view of society as a whole. The first of these cases involves basic scientific research. Generally speaking, the products of basic research-additions to scientific knowl­edge and understanding-are not pat­entable and cannot be kept secret if put to use. Thus research is not subject to appropriation for the exclusive eco­nomic benefit of the researcher. A business enterprise, which maximizes profit by pushing investment to the point where the rate of return to it of the last investment is just equal to the cost of capital, will in basic research stop short of the point where the rate of return to society is just equal to the cost of capital. This explains why most basic research takes place in nonprofit institutions-universities, foundations, and governments-and justifies a con­tinued large role of government in funding basic research in the energy industries. Government also has a legitimate role in conducting or financing applied research in some circumstances-when projects are deemed too risky for private capital to undertake, when the outlays involved are too large to be handled by the typical business enter­ prise in the industry in question, when a problem of great urgency requires rapid mobilization of scientific re­ sources, and when the research prob­ lem affects national security. All of these circumstances seem to apply to current problems of research in the energy industries, from the develop­ ment of economical thermonuclear power to coal gasification, from the use of underground nuclear explosions to loosen tight gas-bearing formations to the development of an economical means of removing sulphur oxides from the wastes of coal combustion. The solution of these and similar pro blems will facilitate the orderly supplementation of and substitution for oil and gas as their real prices rise in the years ahead. In the long run only technological progress can allow us to maintain our standard of living while we are shifting from fossil fuels to renewable energy sources. We will not have the optimum amount of research leading to that progress if we rely solely on private enterprise guided by the price system. But government, supplementing pri­vate enterprise, can well be guided by that system, pushing research and de­velopment to the point where the marginal rate of return to society is equal to the cost of capital. As fossil fuels become progressively scarce and their relative prices rise, the expected rate of return on research leading to substitute fuels will also rise; in an economic system that is functioning well this should lead to a greater allocation of resources to research and ultimately to more feasible substitutes. Rational Leasing of Public Lands It appears likely that a dispropor­tionate amount of the undiscovered oil and gas, and perhaps other minerals, in the United States will be found on federal lands, particularly in Alaska and on the outer continental shelf. Future supplies of these minerals therefore depend partly on the rate at which new lands are offered for lease by the federal government. There ap­pear to be two desiderata in this regard. First, whatever the rate chosen, it should be kept as constant as pos­sible so that the industries involved can plan their exploration and devel­opment programs and make financial arrangements in a systematic way. The growth of oil and gas supplies, for instance, and the financial success of lease sales will both be favored by minimizing the uncertainty about the amount and timing of financial re­quirements, exploration effort, and use of specialized skills and equip­ment. Second, the rate at which fed­eral lands are offered for lease should be that which promises to maximize the value of the underlying resources to society; as a practical matter this means maximizing the discounted val­ue of expected rents in the form of lease bonuses and royalty payments. Speeding up the leasing will tend to speed up the receipt of rent payments, but it will also tend to depress lease bonuses if predrilling exploration can­not keep pace and if there are bottle­necks in those industries supplying equipment and materials to the oil and gas industry. Thus some optimum rate of leasing exists in a given situtation. It must be left to officials of the Depart­ment of the Interior and of the lessee industries, by mutual exchange of in­formation and plans, to define that rate in any given period. Implications for Texas The foregoing discussion leads to the conclusion that we should rely primarily on the price system to guide the future evolution of the energy economy. Most of the other needed policy elements would simply make the price system function more effi­ciently by equating private with social costs. When private costs fully reflect their social counterparts, the need for government regulation is minimized. What are the implications for Texas? As the principal oil-and gas­producing state, Texas would benefit in the short run from the freeing of prices from regulation. Exploration for oil and gas would be stimulated, re­serves and production would rise (or not fall as fast), demand for oil field supplies and services would rise, and incomes generally would be increased. But in the long run the nation as a whole would benefit from more abun­dant supplies and a greater range of choices in energy consumption. The short run differential benefits to Texas and other oil-and gas-producing states should not blind us to the fact that greater reliance on the price system is really in the interest of all regions of the country. The great need is for the nation to take the long-run view and contemplate the benefits that will flow to all if we make an orderly and efficient transition to an energy econ· omy based on renewable resources. Note *Most oil-producing states (but not Texas) have conservation laws under which the con­servation commission may compel a minor­ity of interests in an oil reservoir to join in a unit plan of operation if a large majority have agreed on a plan deemed economical and equitable by the commission. Air Travel Patterns and Regional Orientation Strong commercial ties exist within the region comprised of Texas and the adjoining states. One indicator of the strength of these ties is the relative volume of air passenger traffic between the major metropolitan areas of the region. Most major cities in the region exchange their largest volumes of air passenger traffic with another metropolitan area in the region, usually Dallas-Fort Worth or Houston. A nationwide examination of the air passenger traffic flow patterns of major metropolitan areas indicates that Texas and its neighboring states constitute one of three major national functional regions. The major activity centers for the three national regions are New York, Los Angeles, and Dallas-Fort Worth. The three major regions are divided less precisely into a number of subregions. The focuses for the major subregions in the New York City region are Chicago and Atlanta, and the Chicago subregion contains a secondary subregion converging on Minneapolis­St. Paul. Subregions in the Los Angeles region converge on San Francisco, Seattle, and to a lesser extent, Denver. The Dallas-Fort Worth region contains a subregion converging on Houston. The overall pattern of primary air passenger traffic flows as of 1975 is shown in figure I. The lines represent the largest volume of air passenger traffic from each of the 129 metropolitan areas selected for the examination. The traffic flow volumes are shown on the basis of points of initial origin and ultimate destination without regard to intermedi­ate stopover or connecting points or routing. While excep­tions exist, the delineation of the regional and subregional hinterlands is apparent. Some of the exceptions are a result of the nature of air travel and its relative unsuitability for short-distance trips. For example, although Milwaukee clearly falls within the Chicago subregion, the approxi­mately eighty-mile distance between Chicago and Milwau­kee is rather short for practical air travel, and the primary air traffic flow from Milwaukee is to New York. Metropoli­tan areas such as Milwaukee that are too close to larger Charles P. Zlatkovich metropolitan areas for effective air travel tend to have air passenger traffic pattern characteristics that are similar to those of the larger metropolitan area. Other examples of the phenomenon include Santa Barbara, California, and Columbus, Georgia, whose patterns echo those of Los Angeles and Atlanta respectively. Local economic and political considerations also pro­duce interesting exceptions to the general pattern. For example, Huntsville, Alabama, might be expected to inter­act primarily with New York or Atlanta based on the behavior of neighboring cities; instead, Huntsville marches to the beat of a different drummer and interacts most with Washington, D.C. The importance of federal government activity in the local economy of Huntsville accounts for the unexpected traffic pattern. The role of Tallahassee as the capital city of Florida accounts for its primary interaction with Miami in preference to New York or Atlanta. Similarly, Harrisburg selects Pittsburgh (164 miles away) over New York (154 miles away). The availability of fast, frequent rail passenger service to New York and the relatively short distance are factors in reducing air passenger volume on the Harrisburg-New York route. A few other cities seem to defy reasonable explanation. These include Wichita, which has selected Denver over Chicago or Kansas City, and Baton Rouge, which has selected Dallas while neighboring New Orleans casts its lot with Houston. The primary air passenger traffic flow data indicate that the economic "continental divide" of the nation is some­what to the east of the topographic great divide. The metropolitan areas of Great Falls, Billings, Denver, Colo­rado Springs, Albuquerque, and El Paso are all slightly east of the topographic continental divide but are all in the western or Los Angeles region as indicated by air traffic flows. Interestingly, Colorado Springs had its primary interaction with Chicago in the earlier years of the observation but later joined neighboring Denver in inter­acting most with Los Angeles. The change seems to represent a continuation of the conquest over distance and physical barriers by air transportation. The traditional major rail and highway links to Colorado Springs were from the east, north, and south, with western access impeded by Pikes Peak and the Front Range of the Rocky Mountains. The mountain barriers, which contributed to the early abandonment of the only rail line ever built westward from Colorado Springs, have not inhibited air transportation. Data Sources and Applications The volume of travel between metropolitan areas is an indicator of the trade relationship that exists between them. While the ideal data source for examination of intermetropolitan travel patterns would be a complete matrix of all intercity trips made by all modes of transportation, such data are unfortunately not available. There are no comprehensive national studies of auto or bus travel patterns. Although Amtrak conducts an origin­destination survey of rail passenger movements the data are of relatively little use due to the limited scope of the rail passenger network and are not readily available to outside researchers. The only available national origin-destination data cover commercial air transportation. Air transportation accounts for about 12 percent of all intercity person trips in the United States according to the National Travel Survey conducted as a part of the 1972 Census of Transportation. Air travel is more popular for business travel, which accounts for some 20 percent of all person trips. About 29 percent of all person trips for business purposes are made by air-more than double the percentage of total person trips for all purposes made by air. Air travel also increases in popularity as travel distance increases. While the limitation of available data to air transportation is unfortunate, the air travel data are relatively more representative for business travel and for longer distances, both of which are appropriate for a nationwide study aimed at the examination of commercial relationships between metropolitan areas. The Origin-Destination Survey of Airline Passenger Traffic is compiled by the Civil Aeronautics Board and published by the Air Transport Association of America. The survey is based on a 10 percent sample of all revenue passenger travel on the scheduled flights of all carriers certificated by the Civil Aeronautics Board. The first origin-destination survey was taken in November 1939. A number of changes have been made in the survey method­ology format since the original survey. The origin­destination survey data for the calendar years 1960, 1965, 1970, 1971, 1972, 1973, 1974, and 1975 have been used as the basis for the examination of the changes in national air travel patterns over time. The fifteen-year period encom­passes virtually the entire "jet age" of air travel in the Figure 1 Primary Air Passenger Traffic Flows, 1975 United States. The 1975 data are the latest available at this writing. The 129 metropolitan areas selected for examination represent all of the standard consolidated statistical areas (SCSAs) and nonconsolidated standard metropolitan statis­tical areas (SMSAs) in the adjacent United States that were classified by the Federal Aviation Administration as air traffic hubs in 197 5 and that had maintained that classifica­tion for a significant time in the past. The Federal Aviation Administration classifies metropolitan areas and other cities as air traffic hubs based on the percentage of the total national passenger enplanements at each point. A city must account for at least .05 percent of the national enplane­ment total to qualify as an air traffic hub. The vast majority-more than 89 percent-of all com­mercial air travel in the United States originates at one of the 129 selected metropolitan areas. The selected metropol­itan areas are reasonably well distributed throughout the nation and are located in or include portions of 46 states. As a general rule, the use of historical data was restricted to the top 1,000 city pairs in the origin-destination survey for years since 1970 and to the top 500 city pairs for 1960 and 1965. These are the only city-pair combinations for which overall national rankings were published in the survey reports. The restriction did result in the nonavailabil­ity of data for some of the metropolitan areas in earlier years. The effect of the exclusion of low-volume city pairs is minimized by the concentration of air traffic in the United States. Of the more than 250,000 possible city-pair combinations included in the 1975 origin-destination sur­vey, the top 343 city pairs account for 50 percent of all passengers and the top 1,000 city pairs account for almost 70 percent. The traffic was even more concentrated in the recent past. In 1970 the top 284 city pairs accounted for half of all passengers, and the top 1,000 city pairs represented almost 73 percent of the total. An increasingly significant limitation of the origin­destination survey data is caused by the nonparticipation of carriers not certificated by the Civil Aeronautics Board (CAB). The nonparticipation of intrastate, non-CAB carri­ers has a significant impact on the accuracy of the survey as an indicator of total air travel in California and in Texas. For · most purposes in this study, the origin-destination survey results were adjusted to reflect the traffic carried by intrastate carriers. The city pairs with the most significant volumes of intrastate carrier traffic are Los Angeles-San Francisco and Dallas-Houston. Recent Changes in Air Travel Patterns The examination of recent changes in air traffic patterns was based on the dominant or largest single volume of traffic from each of the 129 selected metropolitan areas for Figure 2 Primary Air Passenger Traffic Flows, 1960 which data were available. Data were available for 109 of the 129 points in 1960, for 111 in 1965, for 128 in 1970-1972, and for all I 29 in 1973 and subsequent years. The principal interactions for 1960 are shown in figure 2; the 1975 principal interactions were shown in figure I. Table I is a list of the principal interaction cities showing the total number of points for which each city was the principal interaction city in each of the years. The most notable trend shown in table I is the relative decline of New York City since 1970. The Big Apple has maintained a definite lead over all other cities, but the number of points for which it is the principal interaction city has declined steadily from 56 in 1970 to 45 in 1975. The most significant gains have been made by Chicago and Atlanta, both at the expense of New York. Elsewhere, Los Angeles has gained at the expense of San Francisco, and Miami has Jost its earlier dominance over most Florida points. Most other cities have remained fairly stable. The application to the data of a procedure for ordering and grouping places developed by John D. Nystuen and Michael F. Dacey indicates that the existence of the three major regions focused on New York, Los Angeles, and Dallas has been consistent throughout the period and that shifts between the regions have been relatively minor. The Nystuen-Dacey procedure classifies places that interact most with smaller places (measured by population or some other appropriate indicator) as "terminal points." Places that interact most with larger places are referred to as "subordinate points." Subordinate points may have other smaller places subordinate to them. Table 2 shows the hierarchy of points for the years I 960-197 5 according to the Nystuen-Dacey procedure. Most of the changes have been within the hierarchy of each of the three terminal points, with relatively few shifts between the three major regional terminals. As noted above, a number of points that were once directly subordinate to New York have shifted to Chicago and to Atlanta, but both Chicago and Atlanta are themselves subordinate to New York. The percentage of the subordi­nate points that are ultimately subordinate to New York has held fairly steady at between 71 and 75 percent, although some decline has occurred since 1970. Comparison of Actual and Simulated Traffic Patterns In order to determine the extent to which the regional delineation indicated by the current air traffic patterns is as would be expected, several variations of the basic gravity model were applied to the selected metropolitan areas. The gravity model is one of the most widely used interaction models. The gravity model derives its name from its similarity to Newton's theory of gravity that the attraction between two objects is equal to the product of their masses divided by the square of the distance between them. In its most basic form, the model may be stated where, the level of interaction between P1 and P2 P1 the population at P1 P2 the population at P2 D the distance between P1 and P2 , and n so me exponent. For the purpose at hand, the model was applied to the 129 metropolitan areas with the exponent of distance "n" (often referred to as the friction of distance) set equal to I and to 2. The gravity model with the exponent of distance set at 2 may be regarded as a rough predictor of total passenger traffic flow between points by all modes of transportation. Figure 3 shows the principal interactions produced by this variation of the model. The lower friction of distance achieved by setting the exponent of distance equal to I might be expected to coincide better with air passenger travel volumes. The principal interactions pre­dicted by the gravity model with n=J are shown in figure 4. While some similarity exists between the patterns pre­dicted by the gravity model and the actual 1975 air traffic pattern, the differences are substantial. With n=2, the gravity model results agree with the actual pattern of principal interactions for only 39 metropolitan areas, or 30 percent of the total. With n= 1, the gravity model and actual pattern agree for 70 areas, or 54 percent of the total. The exclusion of all distances under I00 miles from the gravity model results in an increase of agreement to 65 areas, or 50 percent of the total for n=2, and an increase to 82 areas, or 64 percent of the total for n=l. Examination of Additional Air Traffic Flows Thus far, attention has been devoted only to the largest single flow of traffic moving to and from each of the selected metropolitan areas. The relationship of the largest single flow of traffic to the total traffic volume of each area and to the other traffic flows that comprise the total traffic volume varies between areas. While precise estimates of the / / Figure 3 Gravity Model Principal Interactions, PP/D2 intrastate air carrier traffic not included in the CAB origin-destination survey were not made, an indication of the relative significance of the largest traffic flows may be obtained from the survey data. The largest single CAB­carrier traffic flows of the 1 29 selected metropolitan areas represent about 12 percent of the total CAB-carrier traffic to and from those areas and about 11 percent of all CAB-carrier air passenger traffic included in the origin­destination survey. The inclusion of the intrastate carrier traffic statistics would probably not affect the overall averages significantly. In order to provide a broader base for the examination of air traffic patterns, the second and third largest traffic flows from each of the selected areas were also examined. The largest three CAB-carrier traffic flows account for about 25 percent of the total CAB-carrier traffic to and from the 129 areas and for about 22 percent of all CAB-carrier traffic. On the average, the second largest traffic flows from each point are about 60 percent as large as the largest single traffic flow, and the third largest traffic flows are about 45 percent as large as the largest traffic flow. The largest three traffic flows of each of the 1 29 selected metropolitan areas were also adjusted to reflect intrastate traffic flows to the extent that intrastate traffic information was available. Table 3 lists the 32 metropolitan areas that were the first, second, or third largest interaction partners of one or more of the 129 selected metropolitan New York 4 5 Los Angeles 10 Chicago 18 Philadelphia San Francisco 6 Boston Washingto n St. Louis Pittsburgh Dallas 9 Ho usto n 3 Minneapo lis 3 Miami 5 Seattle 2 Atlanta 5 Ka nsas Cit y I Denver New Orleans Portl and, Oregon Salt Lake Cit y Billings Total 129 129 129 128 128 128 I ll 109 Table 2 Regional Hierarchy, 1960-1975 1975 1974 1973 1972 1971 1970 1965 1960 New York {direct) Chicago Minnea polis Atlanta 45 26 3 9 48 26 3 9 5 1 24 3 8 52 24 3 7 54 23 3 5 56 22 3 5 39 22 3 7 45 18 3 5 All o thers 7 5. 6 5 7 8 6 5 Total New Yor k region 90 9 1 92 9 1 92 94 77 76 Los Angeles {d irect) San Francisco 13 4 13 4 13 4 13 5 12 5 12 5 J O 7 10 5 Seattle 3 3 3 I 2 I I 2 All o thers 3 2 3 2 I 2 I I Total Los Angeles region 23 22 23 21 20 20 19 18 Dallas {direct) Housto n 10 2 9 3 10 I 10 2 10 2 10 I 10 2 9 2 Al l o thers I I I I I To tal Dallas regio n 13 13 11 13 13 I I 12 12 To tal 126 126 126 125 125 125 108 106 areas. The 32 metropolitan areas are listed in population­size order. As expected, New York leads the other cities as an interaction partner with 87 of the other 128 areas (or 68 percent) having one of their largest three traffic flows with New York. Chicago ranks second, with 74 top-three selections from 58 percent of the other areas. Washington and Atlanta tie for third place with 3 3 top-three selections, each representing 26 percent of the other areas. Los Angeles and Dallas follow with 28 and 1 7 top-three selections respectively. The gravity model prediction of the top three traffic volumes produced results comparable with its prediction of the largest traffic flows. With the exponent of distance set equal to 1, the model results agreed with the actual results for 55 percent of the top three selections. With the exponent of distance set at 2, the model results agreed with the actual results for 40 percent of the top three selections-a significant increase over the 30 percent predic­tion of the same model for the largest traffic flows but still well behind the n= 1 model in agreement with the actual results. The exclusion of distances under 100 miles from the gravity model selection increased the percentage of agreement with the actual results to 58 percent for n=l and to 48 percent for n=2. The percentage of agreement increase resulting from the exclusion of the short-distance links is not as great for the top three selections as for the primary interactions. Several distances of less than 100 miles are included among the actual top three selections. Implications of the Study for Texas and the Southwest The examination of the primary air passenger traffic flows of the selected metropolitan areas indicates that most of Texas and the Southwest are functioning as an economic region with the Dallas-Fort Worth area as its major hub and the Houston area as a secondary hub. The region consists of major portions of the states of Texas, Oklahoma, Arkansas, and Louisiana. The only selected metropolitan area within these states that is not included in the region is El Paso, which has consistently had its primary air passenger interaction with Los Angeles. The top three air passenger traffic flows of the 16 selected metropolitan areas in Texas and the surrounding states of New Mexico, Oklahoma, Arkansas, and Louisiana provide additional information on the five-state region and its relation to the rest of the nation. These top three traffic flows are shown in figure 5. The Dallas-Fort Worth area is a top-three interaction partner of all of the other 15 metropolitan areas. Houston is a top-three interaction partner of all of the other areas except Albuquerque, El Paso, and Little Rock. The major interaction partner Figure 4 Gravity Model Principal Interactions, PP/D Table 3 Top Three Interaction Partners, 1975 First Second Third Choice Choice Choice Total New York 45 30 12 87 Los Angeles 13 6 9 28 Chicago 26 32 16 74 Philadelphia 2 2 4 Detroit 4 4 San Francisco s 2 6 13 Boston 2 6 s 13 Cleveland 3 3 Washington 2 8 23 33 St. Louis 1 4 Pittsburgh 3 1 4 Dallas 10 2 s 17 Houston 3 8 1 12 Minneapolis 3 7 3 13 Miami 1 1 2 4 Seattle 3 2 3 8 Atlanta 9 12 12 33 San Diego 1 1 Buffalo 1 Kansas City 3 3 Denver 2 3 3 8 Indianapolis 1 2 3 Tampa 2 3 New Orleans 1 2 Portland, Oregon 2 1 3 Memphis 1 1 Birmingham 1 1 Albuquerque 1 1 Austin 2 2 Las Vegas 2 3 Billings 1 Great Falls 1 Total 129 129 129 387 outside the region is New York, which is a top-three choice of 6 metropolitan areas in the region. The 6 include the 4 largest metropolitan areas in the region: Dallas-Fort Worth, Houston, New Orleans, and San Antonio, as well as Austin ToC~ and Corpus Christi. Los Angeles is the second-ranking interaction partner outside the region with 5 top-three selections involving Dallas-Fort Worth, Oklahoma City, El Paso, Albuquerque, and Amarillo. Other top-three interac­tions involving cities outside the region are Tulsa-Chicago, Little Rock-Chicago, Little Rock-St. Louis, Ba ton Rouge­Atlanta, and Albuquerque-Denver. The remaining top-three interactions of the 16 metropolitan areas are within the five-state area. They are between El Paso and Albuquerque, Lubbock.and Austin, and Midland-Odessa and Austin. The overall air traffic pattern indicates that strong commercial ties exist within the region composed of Texas and the adjoining states. The air traffic flow patterns suggest that firms in the region with regional marketing programs not already distributing throughout the area should consider doing so. Those firms already marketing throughout the region may find it advantageous to expand operations into the next tier of potential markets. The Colorado Springs and Jackson, Mississippi, metropolitan areas already include Dallas-Fort Worth among their top­three interaction partners, as shown in figure 6. Other metropolitan areas with promising potential for increased commercial ties with Texas and the surrounding region include Denver, Wichita, Kansas City, Springfield (Mis­souri), and Memphis. Note Additional information is contained in Research Report 3, Intermetropolitan Relationships: An Examination of National Air Travel Patterns, available from the Bureau of Business Research for $4.00 plus tax. The report includes bibliographic references, a complete listing of the primary air passenger interactions of the 129 metropolitan areas for the years 1960, 1965, and 1970 through 1975 and of the top three gravity model and top three actual 197 5 air passenger traffic interactions for each metropolitan area. ,.... Figure 6 Top Three Air Passenger Traffic Flows to Points in Texas and Adjoining States, 1975 Figure 5 Top Three Air Passenger Traffic Flows from Points in Texas and Adjoining States, 1975 Texas Building Permit Fluctuations in the Seventies Charles H. Wurtzehach Building construction authorized in Texas during August continued to demonstrate considerable growth from 1976 figures. The most recent statistics reveal gains in all construction categories and suggest that the recovery that has been building throughout the year has not yet peaked. In the residential categories, on a per unit basis, apartment building authorizations demonstrated the greatest growth. On a statewide basis apartment unit permit authorizations for January through August 1977 increased 59 percent from the same period in 1976. This increase was primarily the result of the 65 percent gain reported within Texas standard metropolitan statistical areas (SMSAs). Areas outside Texas SMSAs recorded a 24 percent decline in apartment unit permit authorizations during the first eight months of 1977. In other words, apartment construction activity has been concentrated in urban centers rather than in rural communities. Three SMSAs reported increases in excess of 100 percent in apartment unit authorizations: Longview (141 percent), Waco (126 percent), and Dallas­Fort Worth ( 188 percent). Three other SMSAs reported increases in excess of 200 percent: Bryan-College Station (208 percent), San Antonio (215 percent), and McAllen­Pharr-Edinburg (217 percent). These gains indicate that in many areas the apartment unit oversupply that has existed during the past few years has been reduced considerably. In terms of the percentage change in the number of units authorized during the first eight months of 1977, two­family dwelling units had the second largest increase from 1976 levels. The eight-month data show that building authorizations for two-family dwelling units increased 53 percent. However, unlike the apartment category, the greatest gains were reported in areas outside Texas SMSAs; building authorizations for two-family units increased 166 percent outside the SMSAs and 42 percent within the SMSAs. These construction figures and the apartment figures seem to indicate that Texas rural areas are empha­sizing a less dense housing mix than are urban areas. Of course, this is what normally would be expected and does not reflect any unusual tendencies. In the one-family dwelling unit category, building permit authorizations are running 31 percent above 1976 figures. Unlike the two-family and apartment unit categories the gains reported within and outside Texas SMSAs are not that divergent. Data for January through August reveal a 22 percent increase outside the SMSAs and a 32 percent increase within the SMSAs. Thus the geographically uni­form pattern of one-family dwelling unit construction throughout the state is demonstrated. During the first eight months of 1977, 43,356 building permits were issued for one-family units, while 41 ,484 permits were issued for apartment units. However, during August, 7 ,679 apartment units were authorized, while only 5,878 one-family permits were issued. These numbers suggest a recovery of apartment construction relative to one-family construction. Year-to-date nonresidential construction permit authori­zations have also increased from 1976. On a statewide basis the value of nonresidential construction increased 10 percent from the same period in 1976. Interestingly, the greatest percentage gains were reported in areas outside the SMSAs, where a 38 percent increase was reported. Nonresi­dential construction authorized within the SMSAs in the first eight months of 1977 increased in value 8 percent from 1976. Changes in nonresidential construction authori­zation values are difficult to interpret for several reasons: the impact of inflation, differences in types of structures, and, perhaps most importantly, significant differences in the required reporting techniques used by cities. Residential Construction During the Seventies Thus far during the seventies Texas has generally been favored with an extremely healthy economic environment. Residential construction has usually been a part of this healthy environment; however, in certain years the industry fared much better than in others. Fluctuations in the residential construction industry, as based on building authorizations, can be analyzed by examining table 1. In terms of total units authorized the decade can be separated into three distinct periods: from 1970 through 1972, from 1973 through 1975, and from 1976 through 1977. The first three years of this decade were strong years as building authorizations rose each year from previous years to a peak of 122,282 units in 1972. In the second period a significant NEW RESIDENTIAL BUILDING AUTHORIZED IN TEXAS Housing Un11s and folal Value 400 300 \ ~lur \J \ .. ·\· '; 'v \"., ·'., 1970 1971 1972 1974 Source: Bureau of Business Research. 111 cooperatwn with U-S Bureau of the Census slowdown in building authorizations occurred with the lowest number of authorizations recorded during 1975. During the third period a significant recovery has been taking place; an estimated 130,569 units will be authorized this year. It is of significance that the 1972 high was a record to that date and that the estimated 1 977 high will be a record to date. The figures in table 1 indicate that from 1970 through 1973 annual apartment unit authorizations exceeded one-and two-family unit authorizations. How­ever, from 1974 through 1977 the reverse has been true. Data in table 1 show that the cyclical trends that affected the total units authorized also affected individual residential construction categories in a similar manner. In general, 1970-1972 were strong years, 1973-1975 weak years, and 1976-1977 recovery years. During the years from 1970 through 1972 one-family unit authorizations in­creased 45.56 percent; two-family units, 88.10 percent; and apartment units, 26.95 percent. Total units authorized increased by 35.15 percent during the period from 1970 through 1972. From 1972 to 1974 total residential units authorized declined 50.17 percent. One-family unit authorizations dropped 23.59 percent; two-family, 62.56 percent; and apartment, 68.37 percent. During the present recovery period ( 1976 through 1977) total residential unit authorizations are predicted to in­crease 114.31 percent to a new estimated all-time high of 130,569 units. One-family unit authorizations are expected Table 1 Texas Residential Construction, 1970-1977 Year One-family units Percent change fro m previo us year Two-family units Percent change from previo us year Apartm ent units Percent change fro m previous year Total units Percen t change fro m previous year 13.08 S4,814 -6.20 90,478 00.39 197 1 48,767 44.14 3,466 1970 33,832 I 2.S2 1,832 89.19 66,280 20.90 118,S 13 30.98 1972 4 9,249 00.98 3,446 -OJ.IS 69,S87 04.90 122,282 03.18 1973 39,791 -19.20 1,804 -47.64 61,S74 -11.S I 103,169 -lS.71 1974 33,834 -14.97 l ,S08 -16.40 33,778 -4S. 14 69,120 -33.00 22,006 -34.8S 60,92S -I l.8S 19 7S 37,629 11.21 1,290 -14.4S 1976p 47,7S3 26.90 2,410 86.82 41,S l 7 88.66 91,680 S0.48 1977e 64,949 36.01 3,S44 47.0S 62,076 41.S l l 30,S69 42.41 PPreliminary . eEstimated. OCTOBER 1977 to increase 72.60 percent; two-family unit authorizations, 174.72 percent; and apartment authorizations, 182.08 percent. In the peak year of 1972 all categories of residential authorizations reached an all-time high, except for the two-family category, which had a higher level in 1971. The 1977 estimated figures suggest new record high unit authorizations in all categories except apartment units, which probably will not exceed the 1972 level. Percentage increases in permit authorizations during the 1970-1972 cycle were nearly the same in the one-family and apartment categories. Increases in one-family unit authorizations accounted for 48.47 percent of the change in total unit authorizations, while increases in the apart­ment category accounted for 46.46 percent. Two-family unit authorizations amounted to 5 .07 percent of the total during the three-year period. In the period from 1973 through 1975 more than three quarters of the decline in total units authorized can be attributed to the decline in the apartment unit category. One-family dwelling unit authorizations fell 18.93 percent and two-family 3 .51 percent during that period. On a percentage basis the apartment category has dominated to a certain extent 1975 and the 1976-1977 recovery period. From 1975 through 1977 it is estimated that apartment unit authorizations will represent 5 7 .53 percent of the increase in total residential unit authoriza­ tions. One-family units are expected to account for 39.24 percent of the total increase and two-family units 3.23 percent. Apartment unit authorizations have been the most variable component of total permit authorizations. During recovery cycles apartment unit authorizations tend to rise more dramatically, whereas during decline cycles they fall precipitously. The mix of multifamily and one-and two-family dwelling unit permits varies with the permit cycles (see table 2). However, the mix variation does not necessarily correspond to the cycle. During the early cycles (1970-1972 and 1973-1975) the multifamily portion of the mix tended to decline in the respective cycles, but during Table 2 Relation of Apartment Authorizations to Total Authorizations and One-and Two-Family Authorizations to Total Authorizations 1970-1977 One-and two-family Apartment authorizations authorizations as percent Year as percent of total of total 1970 60.58 39.42 1971 55.92 45.08 1972 56.90 43.10 1973 59.68 40.32 1974 48.86 51.14 1975 36.11 63.89 1976 45.28 54.72 l 977e 47.54 52.46 eEstimated. 234 the 197 6-1977 cycle the multifamily portion of the residential building authorization mix is expected to in­crease. Findings of this analysis may be summarized as follows: • During August gains in apartment unit authorizations exceeded gains in the one-family category. • In terms of the number of residential units authorized for construction, 1977 will more than likely be a record year. • The Texas residential construction industry is cyclical in nature. • The residential construction cycle affects all cate­gories of the industry. • On a cyclical basis apartment unit authorizations tend to be more variable than one-family authorizations. • Since 1974 annual one-and two-family unit authori­zations have exceeded apartment unit authoriza­tions. Estimated Values of Building Authorized in Texas# Percent change Classification Augp Jan-Augp 1977 1977 (thousands of dollars) Aug 1977 from Jul 1977 Jan-Aug 1977 from Jan-Aug 1976 All Permits 576,535 4 ,025,169 19 32 New construction 517,663 3,618,210 19 34 Residential (housekeeping) 339,706 2,206,918 33 54 One-family dwellings 240,815 1,669,499 15 46 Multiple-family dwellings 98,891 537,419 119 83 Nonresidential 177,957 1,411,292 - 1 11 Hotels, motels, and tourist courts 0 54,2 5'1 -39 Amusement buildings 3,528 40,006 88 193 Churches 5,146 53,225 -9 30 Industrial buildings 29,125 167,430 17 83 Garages (commercial and private) 1,825 26,243 64 16 Service stations and repair garages 1,143 6,594 44 -9 Hospitals and institutions 2 ,766 91,892 -83 -32 Office-bank buildings 58,207 318,742 149 25 Works and utilities 6,625 43,461 216 - 53 Educational buildings 6,981 170,303 -68 -8 Stores and mercantile buildings 51,147 368,232 4 45 Other buildings and structures 11,464 70,9 13 35 -IS Additions, alterations, and repairs 58,872 406,959 19 20 SMSA vs. non-SMSA Total SMSAt 530,428 3,663 ,9 76 20 32 Central cities 353,007 2,423,837 18 29 O'utside central cities 177,421 1,240,139 26 38 Total no n-SMSA 46,107 361,193 6 33 10,000 to 50,000 population 26,933 201,089 13 30 Less than 10,000 population 19 ,1 74 160,104 - 2 37 #only building for which permits were issued within the incorporated area of a city is included. Federal contracts and public housing are not included. PPreliminary. tstandard metropolitan statistical area as defined in 1975 census. Source: Bureau of Business Research in cooperation with the Bureau of the Census, U.S. Department of Commerce. TEXAS BUSINESS REVIEW Local Business Conditions Statistical data compiled by Mildred Anderson and Marylyn Donaldson. Standard metropolitan statistical areas (SMSAs) include one or more entire counties, as shown. All SMSAs are designated as such by the U.S. Bureau of the Census. Population figures are from the 1970 census and 1975 estimates by the Bureau of the Census. Building permit data are collected from municipalities by the Bureau of Business Research in cooperation with the Bureau of the Census. They represent only building authorizations within city limits and exclude federal contracts and public works projects, such as highways, waterways, and reservoirs. Building statistics for the latest month are subject to revision. Employment estimates include only wage and salary workers and are compiled by the Texas Employment Commission in cooperation with the U.S. Bureau of Labor Statistics. Indicators of Local Business Conditions for Tex as Standard Metropolitan Statistical Areas Percent change Percent change from from Aug Jul Aug Aug Jul Aug Reported area and indicator 1977 1977 1976 Reported area and indicator 1977 1977 1976 CORPUS CHRISTI SMSA ABILENE SMSA Nueces and San Patricio Counties; population: 284,832 (1970); Callahan, Jones, and Taylor Counties; population: 122,164 (1970); 297,300 (1975 est.) 128,400 (1975 est.) Urban building permits ($1,000) 12,665 44 48 Urban building permits ($1,000) 2,867 -49 19 Nonfarm employment 103,050 -1 •• Nonfarm employment 46,760 •• 2 Manufacturing employment 11 ,850 •• 6 Manufacturing employment 5,620 1 -17 Unemployed (percent) 6.4 -7 2 Unemployed (percent) 5.2 4 21 DALLAS-FORT WORTH SMSA AMARILLO SMSA Collin, Dallas, Denton, Ellis, Hood, Johnson, Kaufman, Potter and Randall Counties; population: 144,396 (1970); Parker, Rockwall, Tarrant, and Wise Counties; 152,000 (1975 est.) population: 2,378,353 (1970); 2,552,800 (1975 est.) Urban building permits ($1,000) 10,030 33 6 Urban building permits ($ 1 ,000) 165 ,418 24 84 Nonfarm employment 67,590 •• 2 Nonfarm employment 1,158,200 •• 3 Manufacturing employment 7,800 3 -13 Manufacturing employment 252,800 1 2 Unemployed (percent) 3.5 3 3 Unemployed (percent) 3.9 3 13 AUSTIN SMSA EL PASO SMSA Hays and Travis Counties; population: 323,158 (1970); El Paso County ; population: 359,291 (1970); 414,700 (1975 est.) 394,800 (1975 est.) Urban building permits ($1 ,000) 18,383 38 64 Urban building permits ($1,000) 30,126 56 85 Nonfarm employment 134,900 l 3 Nonfarm employment 180,100 •• 4 Manufacturing employ ment 29,500 3 5 Manufacturing employment 19,500 1 12 Unemployed (percent) 12.2 5 3 Unemployed (percent) 4 .5 -8 -10 GALVESTON-TEXAS CITY SMSA BEAUMONT-PORT ARTHUR-ORANGE SMSA Galveston County; population: 169,812 (1970); Hardin, Jefferson, and Orange Counties; population: 182,000 (1975 est.) 347,568 (1970); 349,500 (1975 est.) Urban building permits ($1,000) 3,436 -14 -24 Urban building permits ($1,000) 14,025 32 32 Nonfarm employment 72,830 8 Nonfarm employment 137,650 •• 1 Manufacturing employment 11,750 1 Manufacturing employment 41,350 •• 2 Unemployed (percent) 7.3 3 Unemployed (percent) 7.4 •• HOUSTON SMSA BROWNSVILLE-HARLINGEN-SAN BENITO SMSA Brazoria, Fort Bend, Harris, Liberty, Montgomery, and Waller Cameron County; population: 140,368 (1970); 169,300 (1975 est.) Counties; population: 1,999,316 (1970); 2,297,300 (1975 est.) Urban building permits ($1,000) 4,380 -1 7 88 Urban building permits ($ 1,000) 129,650 23 29 Nonfarm employment 50,640 1 2 Nonfarm employment 1,165,300 ** 6 Manufacturing employment 9 ,070 2 1 Manufacturing employment J9 1 ,400 • • I Unemployed (percent) 9.7 5 10 Unem ployed (percent) 4 . 7 -4 -19 KILLEEN-TEMPLE SMSA Brazos County; population: 57,978 (1970); 72,300 (1975 est.) BRYAN-COLLEGE STATIO SMSA Bell and Coryell Counties; population: 159,794 (1970); Urban building permits ($1,000) 2,355 -54 9 210,500 (1975 est.) (Monthly employment reports are not available for the Bryan­Urban building permits ($1,000) 4,139 -64 -11 College Station SMSA.) (Monthly employment reports are not available for the KiUeen­ Temple SMSA.) Percent change Percent change from from A ug Jul Aug Aug Jul A ug Reported area and indicator 1977 1977 1976 Reported area and indicator 1977 1977 1976 LAREDO SMSA TEXARKANA SMSA (continued) Webb County; population: 72,859 (1970); 78,100 (1975 est.) Unemployed (percent) 6.8 -6 -27 Urban building permits ($1 ,000) 2,771 42 82 (Since the Texarkana SMSA includes Bowie County in Texas and No nfarm employment 25,450 2 1 Little River and Miller Counties in Arkansas, all data, including Manufacturing employment 1,900 1 po pulation, refer to the three-county region.) 9 Unemployed (percent) 12.9 I I TYLER SMSA LONGVIEW SMSA Smith County; population: 97,096 (1970); 107,400 (1975 est.) Gregg and Harrison Counties; population: 120,770 (1970); Urban building permits ($1,000) 6,940 6 77 125,300 (1975 est.) Non farm employment 42,990 * * 4 Urban building permits ($ 1,000) 6,312 -33 45 Manufacturing employment 12,020 2 3 Nonfarm employment 52,040 •• 4 Unemployed (percent) 5.8 4 2 Manufacturing employment 16,800 •• 6 Unemployed (percent) 5.7 -14 -19 WACO SMSA McLennan·County; population: 147,553 (1970); LUBBOCK SMSA 156,700 (1975 est.) Lubbock County; population: 179,295 (1970); 196,700 (1975 est.) Urban building permits ($1,000) 7,510 56 138 Urban building permits ($ 1,000) 10,449 5 46 Nonfarm employment 62,640 •• 4 Non farm employment 80,81 O I 5 Manufacturing employment 14,790 1 2 Manufacturing employment 13,520 9 IS Unemployed (percent) 5.0 -9 7 Unemployed (percent) 3.0 1 -17 WICHITA FALLS SMSA McALLEN-PHARR-EDINBURG SMSA Clay and Wichita Counties; population: 128,642 (1970); Hidalgo County; population: 181,535 (1970); 220,700 (1975 est.) 130,700 (1975 est.) Urban building permits ($1 ,000) 10,461 43 69 Urban building permits ($1 ,000) 6 ,700 273 186 Non farm employment 56,080 • • 3 No nfarm employment 46,820 •• 4 Manufacturing employment 7 ,240 5 2 Manufacturing employment 8,290 1 10 Unemployed (percent) 11.2 I -14 Unemployed (percent) 3.5 -IO -26 MIDLAND SMSA ••Absolute change is less than one half of I percent. Midland Coun ty; population: 65,433 (1970); 69,700 (1975 est.) Urban building permits ($1,000) 11 ,306 I 09 254 No nfarm employment 28,780 •• 1 Manufacturing employment 1,990 2 6 Unemployed (percent) 2.5 -19 -32 ODESSA SMSA Selected Barometers of Texas Business Ector County; population: 92,660 (1970); 98,800 (1975 est.) (Indexes-Adjusted for seasonal variation-1967=100) Urban building permits ($ 1,000) 3,164 77 79 No nfarm employment 44,230 •• 7 Percent change Manufacturing employment 5,940 •• 6 Unemployed (percent) 2.9 -6 -19 Year-to-Aug date SAN ANGELO SMSA Year-to-1977 average Tom Green County; population: 71,047 (1970); 74,800 (1975 est.) date from 1977 Urban building permits ($ 1,000) 3,476 136 90 Aug Jul average Jul from No nfarm employment 29,360 2 8 Index 1977 1977 19 77 1977 1976 Manufacturing employment 5,450 I I Unemployed(percent) 2.7 -16 -36 Crude o il production 10 l.2p 100.7p 102.1 •• -5 Total electric SAN ANTONIO SMSA power use 204.2p 203.0p 204.9 I 12 Bexar, Comal, and Guadalupe Counties; population: Residential 236.3p 230.3p 255 .6 3 11 888,179 (1970); 977,200 (1975 est.) Industrial 171.0p I 71.7P l 71.7 •• 12 Total industrial Urban building permits ($1,000) 25,229 •• 63 production 139.0p l 39.8p 137.6 -1 No nfarm employment 332,850 •• 1 Urban building Manufacturing employment 42,500 2 3 permits issued 358.9p 310.8p Unemployed (percent) 7.4 -11 6 303.7 15 31 New residential 482.4p 383.3p 369.7 26 53 SHERMAN-DENISON SMSA New no nresidential (unadjusted) 244.3p 247.0p 242.1 -I 11 Grayson County; population: S3,225 (1970); 79,000 (1975 est.) Total nonfarm Urban building permits ($1,000) 2,667 8 248 employment 148.3p !48.6p 148.2 •• 3 Non farm employment 31,020 1 s Manufacturing Manufacturing employment 11 ,290 2 10 employment 133.sP 133.0p 132.3 •• 3 Unemployed (percent) 6.8 -16 -31 Average weekly earn-ings-manufacturing 197.3p 197.6p 192.6 •• 6 TEXARKANA SMSA Average weekly hours-Bowie County, Texas; Little River and MiUer Counties, Arkansas; manufacturing 97.2p 96.9p 2 9 6.4 •• population: 113,488 (1970); 114,700 (1975 est.) Total unemployment 169.8 157.2 168.9 8 4 Urban building permits ($1,000) 3,482 -13 248 Insured unemployment 301.6 268.0 256.0 13 2 Nonfarm employment 40,720 •• 2 Manufacturing employment 8,350 •• 9 Preliminary. **Change is less than one half of I percent. Barometers of Texas Business (All figures are for Texas unless otherwise indicated.) All indexes are based on the average months for 1967=100 except where other specification is made; all e.\ CCpt annual indc:\cs arc adjusted for seasonal variation unless o therwise noted. E111ploy111cnt estimates arc compiled by the Texas Employ111cn1 C 111111issio 11 in coopcra1io11 with the Bureau of La bor Statistics of the Department of Labor. The symbols used below impose qualifica tions as indica lcd here: p prcli111inary data subject to revision; r-reviscd data; *-dollar totals for the fiscal year to date; j·-e111ploy111ent data for wage and salary workers only. Aug Jul Aug Year-to-date average 1977 1977 1976 1977 GENERAL BUSINESS ACTIVITY Wholesale prices in U.S. (unadjusted index) . .. ... .... . .. ... . . . 19 4.6 l 94.9r 183.7 J92.9 18 1. 6 Consumer prices in Dallas (unadjusted index) .. . . . . . . . . . . .. .. . 182.4 169.0 179.0 166.3 Consum er prices in U.S. (unadjusted index) ... .. ............•. 183.3 182.6 I 7 1.9 179.8 169.0 Sales of ordinary life insuran ce (index) ... .. ...... . . . . ... . . . . 297.7 272.3 256.6 280.0 248.3 PRODUCTION Total electric power use (index) ... .. . . ........ ..... . . ..... . 204.2p 203.0p 187.4r 204.9 183.6 Residential electric power use (index) ...... . .. .. . ......... . 236.3p 230.3p 223.3r 255.6 230 .2 Industrial electric power use (index) . . ............. . . .... . • l 7 l.Op l 7 I.7P 157.4r 171.7 J52.7 Crude oil production (index) ....... ...... .. .. ... . . .. ..... . 101.2p 100.7p 105.7r 102.l 106.9 Average da il y production per o il well (bbl.) .................. . 17.8 l 7 .9 19.2 18 .0 18.9 Industrial productio n -to tal (index) .................... . .. . . 139.0p l 39.8p I 3l.9r 137.6 131.6 Industri al productio n-to tal m anufac tu res (index) ... .. ...... . l 45.3p 146.S p 137.0r 144.S 137.0 Industrial prod uctio n -durable manufactures (index) ... ... .. . I SO . Ip l so.8P 138 .0r 145.S 137.1 Industrial prod uctio n -nondurable m anufactures (index) .. ... . 141.4p 143.l p l 36.3r 14 3.7 137.0 Industrial prod uctio n-mining (index) .. .. . .. . . . ...... . . .. . . l l 7.6p 117.S P I 14.4r 115.6 1 14.0 Industrial prod uction-utilities (index) ... . ..... . .. ..... . .. . 190.l p 190.l p I 73.2r 185.3 169.S Industrial prod uction in U.S. (index) ... .. . . . .. . .. . .... . . . . . . I 38.2p l 38.9 p 131.3r 136.2 128.9 Urban buil ding perm its issued (index) . . ... .. ....... . ....... . 358.9p 3 10.8 p 2 2 7.7r 303.7 23 1.l New residential building auth orized (index) . . .... ..... .. . . . . 482.4p 383.3p 268.8r 369.7 241.3 New resid ential units authorized (index) . . ......... .... .. . . . New nonresidential buil ding authorized (unadjusted index) ... . . 237.7p 244.3p l 75.8p 247.0p I 36.8r 181.6r 184.6 242.J 128.6 2 17.7 AG RICULTURE Prices received by farmers (unadjusted index) .......... .. .... . 19 3 l 9Sr I 94r 196 194 Prices paid by farmers in U.S. (unadjusted index) ............. . 202 203 195 202 192 Ratio of Texas farm prices received to U.S. prices paid by farmers . .... .......... . . . . . ... . ............. . .. .. . 95.S 96. 1 99.S 97.0 J01.0 FINANCE Bank commercial loans o utstanding (index) ...... . .. .. .. .. . .. . 204.4 202.S 190.S 20 1.6 18 5. 1 Weekly conditio n report o f large commercia l banks, Dall as Federal Reserve District Loans (millio ns) .... ....... ... ... . . . . ........ . .. . ... .. $ 13 ,385 $ 13 ,110 $ l J ,288 $ 12 ,592 $ 11 ,027 Loans and investments (millio ns) ............ . .. . ..... . .. . $ 19,80 5 $ 19,4 50 $ 17 ,142 $ J8,928 $ 16,725 Adjusted demand deposits (millio ns) . . . . . ... .. .... . ... . . . .. $ 5,302 $ 4 ,982 $ 4 ,724 $ S, J 32 $ 4,824 Revenue receipts of the state comptro ller (thousands) ... . . . . .... $ 80 5.3 $ 622.8 $ 688. J $ 656.2 $ 598.7 Federal Intern al Reve nue collectio ns (mill io ns) .... . ....... .. .. $ 1,5 02.7 $ l,775.4 $ 1,126.0 $20,015.S * $ 15,405 . 1* Securities registrations-original applica tio ns Mutual inves tment compan ies (thousands) ... .. ..... .. . ... . . $ 108,222 $ 6 1,92 1 $ $ 790 ,726* All o ther corporate securities Texas companies (thousands) ...... . . . ... . .. .... . ....... $ $ 5 ,2 7 5 $ 826 $ $ 14 5,86 1 * O ther companies (thousands) . ................. . . . .. ... . S $ I 0 ,288 $ 9,848 $ $ 128,593* Securities registration -renewals Mutual investm ent com pan ies (thousa nds) . . . . . ............. S $ 18,606 $ 47 ,2 49 $ $ 497,84 8* O ther corpo rate securities (tho usands) .... . .. .. ........ . . .. $ $ 356 $ 0 $ $ 6, 132* LABOR Total no nagricultu ral employment (index)t . . . . . .. . .. . . . . .... . 148 .3p 148.6p 144.6r 148.2 143.2 Man ufacturing employmen t (index)t ..... . ...... .. . . ... . . . I 33.Sp 133.0p 130 .1 r 132.3 128.4 Average weekly ho urs-manufacturing (index)t ... ... ......... . 97.2p 96.9p 97 .7r 96.4 98.S Average weekly earn ings -manufacturing (index)t ... ..... . ... . . l 97.3p I 97.6p 18 J.8r J92.6 18 1.l Total nonagricultural employment (tho usands)t .. . ....... . ... . 4 ,84 l.8p 4,84 6.8p 4,7 19.6r 4,810.8 4 ,65 0.0 Total manufac turing employmen t (thousands)t .. ... . ... . . .. . 892 .0p 892 .Sp 869.sr 878.J 852.7 Durable-goods employment (thousands)t ....... .. ........ . 49 1.2 p 49 l .6p 477.l r 482 .7 466.9 Nondurable-goods employmen t (thousands)t ......... . ... . . 400.8p 400.9p 392.4r 395.4 385.8 Total civilian labor fo rce in selected labor m arket areas (thousands) .. . .... .. . . ............... . .... . · · · · · 4 ,5 77.9 p 4,588.4p 4,440. lr 4,5 1 1. 7 4 ,36 1. l Na~~:~rg~~~~~a~;s)f'.o~~en'. '.n ~~l ect·e·d­l ab~~ '.1:~r.k~'. . .. .. . ... . 3,990.8p 3,988.9p 3 ,8 5 5 .9r 3,948.S 3,8 18.4 Manufacturing employment in selected labor market areas (thousands)t ......... . ... . .. . .. . . ..... . ..... . . 731.7p 733.0p 71 8 .6' 72 1.4 708.9 Total unem ploym en t in selected labor market areas (thousands) .... ... ......... . . . . . ...... · · · · · · · . · · · · · · · 244.Sp 252 .3p 268.2r 244.6 267.9 Percent of labor force unemployed in selected labor market areas ..... . .. . .. . .... . ........ .. . . .. ... .. . S.3P s.sP 6 .or 5.4 6. l Percent of total labor fo rce unemplo yed .... . .. .. . . . .... .. .. . 5. 1p S.3P S.8r 5.2 5.9 BUREAU OF BUSINESS RESEARCH SECOND-CLASS POSTAGE PAID AT AUSTIN, TEXAS THE UNIVERSITY OF TEXAS AT AUSTIN AUSTIN, TEXAS 78712 Of T£XAS MANUfACTUR£RS The annual issue of the Directory of Texas Manufacturers is the most complete and up-to-date source of information on Texas manufacturing plants. It has been designed especially for agents or individuals selling to or buying from Texas manufacturers. For each of the more than 14,000 plants included, the Directory lists the name, address, and telephone number of the plant, name of the executive officer, and descriptions of products. Data have been obtained primarily from the manufacturers themselves, with supplementary information obtained from local chambers of commerce. Volume 1 contains an alphabetical listing of plants by firm name and a listing of plants organized by city. Volume 2 contains the product listings arranged by Standard Industrial Classification number and an alphabetical index of products with SIC numbers. ISBN 87755-273-8 $40.00 per set (Texas residents add $2.00) Bureau of Business Research • The University of Texas at Austin Austin, Texas 78712 For information call 512/471-1616. Ms. Briceno or Ms. White.