• 1 day The Federal Reserve and Money...Aspects which are not widely known
  • 8 minutes How Far Have We Really Gotten With Alternative Energy
  • 12 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 5 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 2 days Coincidence of EIA Report Delay? - "I had seen it delayed minutes, and a couple of times a few hours, but don’t recall something like this — do others?" asks Javier Blas
  • 8 hours European Parliament Members, Cristian Terhes et al, push back against Totalitarian Digital ID and Carbon Tyranny in Europe.
  • 3 days Demonising fossil fuels has caused major grid problem in Australia
  • 8 days "And this is perhaps the most dangerous kind of government there can be."
  • 2 days "...too many politicians believe things that aren’t true." says Robert Rapier
  • 4 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 3 days Welcome to Technocracy - The New World Energy Order... "1000s Of Sydney Homes Plunged Into Darkness As Aussie 'Price Cap' Policy Sparks Energy Shortage"
  • 5 days "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 329 days Beware the Left's 'Degrowth' Movement (i.e. why Covid-19 is Good)
  • 7 days ESG Topic - "German Police Raid Deutsche Bank, DWS Over Allegations Of Greenwashing" - ZeroHedge Bloomberg and others
Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Why Oil is Good for Real Estate

Sometimes I think we forget how good things have been in the natural resources sector recently. Especially compared to other sectors.

Glancing at some data on the U.S. Home Price Index (HPI) from Lender Processing Services, I was struck by what the metric seems to be telling us about the impact of petroleum on the wider economy.

In most states, the Home Price Index is still well below the peaks that were set in 2006 and 2007. The chart below shows the most-recent index values (from May 2013) as a percentage of the peak value. Those with values approaching 100% are thus getting back to near their pre-crash highs.

Home Price Index

You can see that in Texas and Colorado home prices have already regained their peaks. And Pennsylvania is not far off.

The interesting thing is that all three of these states have very active oil and gas sectors.

I don't think that's a coincidence. Oil and gas has been one of the best-performing segments of the U.S. economy. Spurred by the development of unconventional resources. And the three top states in the above graph are all big players in that movement.

If true, this shows us cost inflation is happening in resource-rich areas. Money is pouring into local economies in producing regions and driving up prices.

This doesn't just affect homes. It also raises input costs for development and production companies. A big part of the reason why the mining business is suffering.

The petroleum sector, being larger, has been better able to handle capital inflows. But the industry is not immune to rising prices. We should be watchful for inflationary effects showing up in the financials of E&Ps.

Here's to keeping things affordable,

Dave Forest


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Gal Sitty on July 31 2013 said:
    Good for real estate? Sure it may have a localized effect in oil-adjacent areas as mentioned, but overall increasing oil prices have been shown to de a detriment to housing values and contributed to the real estate bust in 2007-2008 as shown in the Joe Cortright study. Are these localized effects mentioned in the article even large enough to offset the downward pressure on real estate prices that high oil prices create? I would think a more thorough analysis that fully takes into accounts all impacts of oil drilling would be needed to better see how real estate is affected.

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News