The oil production equipment dotting so many fields in Texas is doing more than providing energy for the rest of the country. It's also helping to provide education.
The royalties collected from drilling are contributing greatly to the endowment that supports the University of Texas and Texas A & M University systems. In the 2013 fiscal year, they provided $648 million for the Permanent University Fund, up from $506 million a year earlier and $279 million in fiscal 2009. Now, the endowment total stands at an impressive $14.8 billion, a record figure.
Randy Wallace, chief budget officer for the UT system, described the growth in the last four years as significant. In that period, the fund is up 53 percent.
The institutions manage over 2 million acres of state-owned land in the Permian basin, where oil was discovered in the 1920s. Recent technological developments, including in hydraulic lifts and high pressure water pumps, have created a boom, whereby companies are able to retrieve more of the precious resource. Formations which were previously inaccessible are now prime candidates for drilling, and businesses are responding: production has more than doubled over the last three years to more than 3 million barrels per month, and is expected to hit 4 million in the next two years.
Money collected by leasing the land goes to the permanent fund, managed by the University of Texas Investment Management Co., a private, nonprofit company. While state law prohibits it from going directly to operations, regents are permitted to distribute 4.75 percent of a three-year average of the Permanent University Fund's asset value to paying off debt and administrative costs. This allows them to free up funds for other University uses.
Oil isn't just the future of energy. In Texas, it's also the future of education.