Permian Basin Oil Workers Face Possible Bust As Global Oil Markets Crash

Oil makes and breaks the region.

By Mitch BordenMarch 13, 2020 3:36 pm, , ,

From Marfa Public Radio:

In West Texas, the Permian Basin is home to America’s largest oil field, where just about everyone depends on the energy industry. But with the spread of the coronavirus pandemic, world markets in flux, and Saudi Arabia and Russia starting a price war over crude — oil prices have plummeted.

Leaving oil companies in West Texas to scramble to roll back operations while locals are forced to wonder if this is the next big bust.

At 1:30  a.m. on Monday, Gricelda Rubio’s phone rang. Her husband, a drilling rig operator, was calling from out in the field. He had bad news.

“We need to get prepared the oil field just dropped,” Rubio remembers her husband telling her over the phone. “I don’t know if we are going to have a job or what’s going to happen.”

This, she said, was heartbreaking. Her husband has lost his job before in a bust, so when Rubio’s husband told her that oil prices were falling fast all she could think was, Oh no, not again.”

She lives in Andrews, about an hour north of Odessa, and Rubio only has to worry about herself and her husband. Still — they have bills to pay.

“We live day by day,” Rubio said. And without some money saved up, she said “you can’t get through” big downturns like the one facing the Permian Basin.

Oil makes and breaks the region. When the oil market is good, prices on pretty much everything—like rent, food, and services—shoot up. But locals can mostly keep up because salaries across the board shoot up as well.

When oil crashes though — a lot of people are left in the dust.

That’s the position Clayton Dement finds himself in. The 22-year-old can’t stop thinking about what’s going to happen if he loses his job as a safety technician in the oil field.

“If [oil] doesn’t come back from this I’m going to have to sell the truck I just bought,” his anxiety is obvious as he describes the thought running through his head, “I’m going to have to take all the money out of my 401k just to pay my rent. I’m going to have to find something else.”

Dement came out to Odessa three years ago to work in the oil patch. He makes good money, about $80,000 annually monitoring poisonous H2S gas on drilling sites. Dement dropped out of college to head out to the Permian Basin and is essentially following in his father’s footsteps.

In the 1980s, his dad worked in the West Texas oil fields until one of the region’s worst busts left him unemployed. Decades later, it might be Clayton Dement’s turn to face that reality, but he still has a job—for now.

Dement said he’s not alone in wondering what his future looks like.

“You see everybody I’ve talked to, every single one of them, is talking about what they are going to do when it eventually comes out and their company goes out of business”

It seems one of the worst parts of this situation for Dement is he has no way of knowing when or if he’s going to lose his job. In a lot of ways, he’s powerless as global oil markets are thrown into crisis.

“I’m nervous. I’m scared. I know people that [already] got laid off and I feel like there’s going to be a whole lot more of that around this area,” said Dement.

And, unfortunately, he is probably right. That’s according to Reed Olmstead, a lead oil analyst focusing on North America for IHS Markit.

If Olmstead ran into an oil worker at a bar right now, he said he’d “buy their beers” because that’s really the only good news he could give them. Olmstead used to work for a small oil company and had to leave the industry because it was too unpredictable. “This is an unpleasant world we live in. It’s a boom and bust.”

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