New Economy cities: Houston aims to move beyond the oil age

The moment oil came spewing out of the Lucas No. 1 well at Spindletop on Jan. 10, 1901, Texas’ economy was forever wrenched from its agricultural roots and thrust into the Industrial Age of the 20th century.

Today, nearby Houston is still riding the economic gusher produced by the major oil discoveries in the southeast part of the state. But as the world increasingly sees the need to switch from fossil fuels to renewable energy, Houston is pursuing the next “Spindletop” to blow it into the 21st century.

Many say the city is poised to do well because of its ties to the global marketplace. Houston is home to NASA, as well as the largest medical complex in the world, the second-busiest port in the nation, and a strong international business sector.

“We see our future over the next decade as playing to our strengths of the past while making them relevant today,“ says Jeff Moseley, president and CEO of the Greater Houston Partnership, a business group.

One example of how that works: This June when Vivante GMP Solutions, a biologics manufacturing company, set up shop here, it needed “clean rooms,” areas with a controlled level of dust and other contamination. Area contractors could draw on expertise gained through decades of working for petrochemical companies. The clean room took shape, cheaply. “To me, Houston is the perfect intersection of old industry stepping up to advance leading-edge industries,” says Vivante's founder and president, J. David Enloe Jr.

But Houston has much more than energy experience powering its future. It is the largest US port in foreign tonnage and the second largest in total tonnage.

“Most US ports are primarily importing goods,” says James Edmonds, chairman of the Port of Houston Authority. “We are exporting more than we import now – and that’s a sign that the Texas economy is stable and will have plenty of jobs for the future.” Construction at the Port of Houston is racing to keep up with burgeoning ship traffic. Authorities recently completed an $81 million container terminal and plans exist for another one.

Then there is the Texas Medical Center, which may be Houston’s version of the Great Pyramids, only with windows and an antiseptic smell. More than $3 billion is going into expanding the Med Center’s footprint from 30 million to 40 million square feet – making it larger than the size of the area inside Chicago’s Loop. The complex currently serves up to 65,000 patients a day, says Richard Wainerdi, the CEO.

Still, even with the port, the medical center, and NASA, the petrochemical industry remains the flywheel of the economy – accounting for about half the area’s total output. Eager to be in the vanguard of the New Economy, city officials are trying to redefine Houston as more than just an oil and gas capital. They want it to be an energy capital – including renewables.

Last summer, for example, Houston became the No. 1 municipal purchaser of green power in the nation, with 25 percent of the city’s total electricity load coming from wind energy. (Texas leads the US in wind-energy production.) But some economists caution against teaching an old dog too many new tricks.

“For years, alternative-energy people have been saying we need to change,” says Ronald Welch, an economist in the Institute for Regional Forecasting at the University of Houston. “Thirty years ago, alternative energy constituted 3 percent of energy use in the United States. Today it constitutes only 6 percent.”

Other cities:

1. Boston is magnet for high-skilled workers

2. Fort Collins, Colo., builds on clean tech

3. Huntsville eyes next launchpad for growth

4. A Seattle slew of advantages

5. The next boom cities overseas

Main story: Five cities that will rise in the New Economy
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