At the Burger King outlet in downtown Hobbs, New Mexico, a new sign has been taped to the storefront: “NOW HIRING: COOKS/CASHIERS APPLY INSIDE!”
Similar notices proliferate on the city’s main mall: Pizza Hut, Little Caesars, T-Mobile, CVS, K-Mart, Quickcuts and Neighborhood Barbershop are all vacancies.
A boom is underway in this dusty, sun-bleached desert city: unemployment plummets, wages soar, and new tax revenue pours into state coffers. Driving it all is an increase in crude oil production from the Permian Basin, a vast hydrocarbon mine that stretches across west Texas and southeastern New Mexico.
While other U.S. oilfields are in decline, Permian production hit a record high last year as Russia’s invasion of Ukraine helped push up energy prices. At 5.6 million barrels per day, the field now accounts for nearly half of all oil produced in the United States, pumping out more than many OPEC nations. The state of New Mexico’s crude production last year eclipsed Mexico’s nationwide production.
Unemployment in the US oil and gas industry fell from around 6% a year ago to less than 2% in December – the lowest in a decade, according to the Bureau of Labor Statistics. This contrasts sharply with sectors of the economy rocked by rising interest rates: Tech companies have laid off nearly 230,000 employees since the start of 2022, according to layoffs.fyi, which aggregates job cuts.
Some 2,500 kilometers from Silicon Valley, the bustle of the Permian is palpable. Oil and gas producers deployed 350 rigs in the region last week, up about a fifth from the same period last year, according to data compiled by Baker Hughes. Other jobs followed, from truck drivers and mechanics to hotel cleaners and construction workers.
“Business is booming,” said Bruce, a 19-year-old worker at a Hobbs supermarket, as he retrieved shopping carts strewn across the square’s parking lot by the overnight influx of oilfield workers. “Work is at an all time high. . . everyone is looking for someone”.
Outside of Hobbs, oilfield traffic takes winding county roads with names like Battle Ax and Oiler. Trucks loaded with sand and gravel race down the highways, pickup trucks pull trailers carrying shiny new diggers; SUVs cart diesel engines and pipe reels.
Their passengers are suddenly making a lot of money. New Mexico thugs can command rates over $27 an hour, consultants Rystad Energy say, up from $18-20 a year ago. A commercial trucking license alone is enough to pocket a salary of over $100,000 without even a high school diploma.
“Most entry-level jobs currently cost between $15 and $20 an hour, and generally more towards the higher end,” says Sam Cobb, mayor of Hobbs. “This is a great opportunity for people who are not [privileged backgrounds]. Unless you’re an engineer, you don’t need to go to college to become an entry-level worker in the oil and gas industry.
Lea County, where Hobbs sits, now produces more oil than any other county in the United States from wells operated by companies such as Devon Energy and EOG Resources. The increased production increased tax revenue for New Mexico, historically a state with one of the highest poverty rates in the nation. The state budget has grown from less than $6 billion four years ago to nearly $9.5 billion this year, with planned increases for spending on education, housing, health and care. ‘infrastructure.
“It was just spectacular,” says Cathrynn Brown, a Republican congresswoman in the New Mexico state House of Representatives. “It’s a boom, that’s for sure, but it’s bigger. . . than anything we’ve seen before. This is unheard of. »
Hobbs has had booms – and busts – before. In the 1980s, when oil prices crashed to historic lows, cars in the city wore stickers on their bumpers that read, “Can the last person to go turn off the lights? The onset of the pandemic in 2020 effectively brought oilfield activity to a halt as prices crashed again, hitting workers.
Now the mood is different as experts predict record global demand for oil this year and crude prices are stabilizing around $80 a barrel.
Plum oilfield wages have drawn workers from traditional service jobs like retail and hospitality, leaving restaurants operating at half capacity due to a lack of staff. Others have raised wages in an effort to compete: Burger King is offering up to $28 an hour to flip burgers, a job that averages $19 in New York.
“Trying to recruit into oilfield jobs is hard enough. But retail recruitment is very difficult,” says Jennifer Grassham, who leads the Lea County Economic Development Council. “I would say everyone is looking for people. It doesn’t matter if it’s a retail business or an oilfield.
Hotel rates are climbing as rooms are increasingly booked up midweek to accommodate visiting workers. Insignia Hospitality, which operates a portfolio of more than 20 hotels across the Permian, is opening a new Hilton franchise in Hobbs next month, its fourth location in the city.
Rachel Overman, chief operating officer at Insignia, is optimistic. “Otherwise,” she said. “We wouldn’t build a new hotel there.”
Lea County’s unemployment rate was 3.7% in November, roughly in line with the national average. Residents say the reality on the ground in the county of 73,000 is an even tighter job market.
“There is an unemployment number. But my personal opinion is that I think these people are the ones who don’t want to work – because there are jobs,” says Dustin Armstrong, director of the local chamber of commerce. “We’re in the busiest spot in the busiest oilfield in the United States.”
The current bull cycle comes despite fears that the shale revolution that has made the United States the world’s largest supplier of oil and gas is coming to an end. Wall Street is demanding that profits be returned to shareholders rather than splurge on drilling. And in many parts of the country, the best acreage has already been drilled.
Oil producers are now complaining about runaway cost inflation, another reason the U.S. shale sector as a whole is struggling to increase oil supply as quickly and easily as in the past. On top of that, the push to wean the world’s biggest economy off oil and gas in favor of cleaner alternatives is accelerating.
But in the Permian, we are convinced that America will continue to consume the hydrocarbons it produces for a long time to come.
“We’ve been looking at the whole energy mix dilemma from a different angle since we’ve been in the business here,” says John Yates, managing director of Abo Empire, a local producer. “The Permian Basin is over 100 years old, but that doesn’t take us back to the pile of dinosaur bones.”