Houston Chic.

ENERGY gloom may be spreading to the rest of the country from California, but not everywhere. The dollars that are leaving us at gas stations and when we pay our energy bills are going somewhere.

You want to visit your money? Go down to Houston, where you can see where it is being spent. You can see it in the crowded malls, the almost L.A.-level congestion on the freeways and the seas of the latest SUVs and luxury cars.

Perhaps the most obvious geographical beneficiary of the new focus on energy supplies will be Texas, which is one of the few states that have added significant additional energy supplies -- enough for a glut -- during the past decade. Euphoria is particularly marked in Houston, the mecca of the energy industry.

In a recent speech about the California energy crisis to the Houston Club, legendary energy entrepreneur and investor M.R. Simmons declared in typical Texan hyperbole, that the city now could emerge as "the No 1 city on earth."

Houston's growth numbers have certainly been impressive. Job growth and net absorption rates for the past five years have been among the best in the country; the rate of economic growth last year was twice the national average. As job growth is expected to slow nationwide, it is expected surge by as much as 3.5 percent. Last year, according to Bill Gilmer, economist for the Federal Reserve Office in Houston, Houston edged out Atlanta as the most popular city for employee relocations in the nation.

Demographically, Houston is also now more vital than L.A., which had only so-so population growth in the decade, and is largely unhappy with that to boot.

Houston grew both in the way that L.A. did -- through immigration and births to immigrants -- and the way that Southern California did not, through continued in-migration from other parts of the country. Only rival Dallas enjoyed a similarly strong two-pronged influx.

The big energy capital by the murky waters of the ship channel -- Houston has no direct access to the sea -- is surging economically on all cylinders. Vacancy rates are plummeting and they are even-building new high-rises in the once-desolate downtown. The run on class-A space in particular has been spectacular, as energy-related firms gobble up the high-end space. In the last quarter of 2000, according to estimates by the local real estate firm of O'Connor and Associates, class-A space accounted for the bulk of the more than 1 million square feet absorbed.

Thriving downtown

Well ahead of its Los Angeles rival, downtown Houston is even developing somewhat of a life outside of business, with several thousand permanent residents and a newfound reputation as one of the town's up-and-coming neighborhoods for hip, unmarried professionals. An estimated 3,000 residents have moved into the area in recent years, and new apartments are being erected throughout the area.

"There are restaurants you can go to now, antique stores, neat architecture," notes Jacqueline Northcut, who runs the technology practice at Arthur Andersen's Houston office. "It's all happened in two years -- five years ago nothing was happening there."

Energy industry money, Northcut says, is also fueling a mounting tech boom in oiltown. As venture capital dries up in places like Southern California, the energy industry is fueling a new wave of tech companies, from Internet startups to the latest imaging system companies. Techies, looking for a safe haven, are giving up on their traditional reservations about the steamy oiltown.

"Houston is becoming chic," notes Claire Farley, who runs Trade-Ranger.com., a Web site heavily funded by energy companies.

The reality is that Houston is no longer a rough town dominated -- as California sophisticates might wish -- by boot-wearing yokels in the oil "bidness." Increasingly, cities like Houston sell expertise as well as street smarts. The "energy corridor" which sprawls west of the city is in that sense not much different than Hollywood or Wall Street. The place is increasingly dominated by MBAs, many of them with wide-ranging global experience.

But it's really politics that makes this a tale of different cities and different states. From the political perspective -- particularly in energy policy -- things could not be more different between Los Angeles and the Texas megalopolis.

Washington clout

In Houston, President George the Shrub looms like a mighty oak, a natural leader of men and oil companies. His "let's drill, don't conserve and drive SUVs till we drop" politics work great there.

With confident control of the White House, and enormous power in the House as well, Houstonians and other Texans see only a manifest destiny ahead of them. The emerging Lone Star scenario runs like this. Energy prices, and shortages, drive more and more high-tech companies out of California. The Golden State's infrastructure, which seemed ready for a long-needed overhaul, is already creaking. The cash to do the job is gone, and much of it to Houston. Tech goes Texan and the California era is history.

Indeed, it seems like a long time ago that L.A. was widely regarded as the inevitable capital of the Sun Belt. After all, we not only have perfect Pacific Rim access, but a great climate and topography. Hollywood lived here, and the counter-New York arts community clustered in the more humane environment of Southern California. We even had our own oil.

But now, L.A.'s prospects seem greatly diminished compared to those of the Lone Star larcenists. Under the new L.A. political order, redistribution and enviro-nimbyism, not economic growth, seem to have priority. Even our ethnics are different.

Texas Latinos tend to be more private-sector-oriented, while our local Latino political leadership -- as if fulfilling the fervent fantasies of white intellectual radicals -- seems more interested in trying to turn a historically self-sufficient population into one ever more dependent on government and the politics of grievance.

So as our politicians, led by the inept Gov. Gray Davis, whine about energy prices, Texas sets about to win the whole enchilada. Texans can smell the fear and sense the weakness that inhabits our political leadership, our academics, media and business elites. Unless we turn it around soon with a mixture of realism and old-fashioned California arrogance, not even a change in leadership in the White House could come soon enough to rescue Los Angeles from losing its lock on the 21st century.

Joel Kotkin is a senior fellow at the Davenport Institute for Public Policy at Pepperdine University and at the Milken Institute in Santa Monica.