Not too long ago some of the state’s hottest real estate was in West Texas’ Permian Basin oil fields. Now, those once-pricey land parcels have seen a huge dip because of the pandemic oil bust.
Paul Takahashi, business reporter for the Houston Chronicle, told Texas Standard that land prices have “fallen precipitously” in recent years.
“There was a report that came out this week from Rystad, which is a Norwegian energy research firm, that found that the average price of a shale acreage across the country has fallen by more than 70% in just two years,” he said.
During better times in 2018, land was going for about $17,000 per acre. Now it’s down to about $5,000 per acre. The pandemic is a big reason for that decline.
“Oil and gas companies are not drilling many new wells to pump for oil and gas right now,” he said. “A lot of folks are still working from home and are not traveling as much. And so the demand is just simply not there for crude oil and other petroleum products such as gasoline and jet fuel.”
The industry goes through boom and bust cycles, so the dip in land value isn’t unheard of. But if oil prices stay below $100 per barrel, especially as energy companies consider shifting toward more renewable energy, the bust could be around longer than usual.
“We see, of course, a shift in perceptions and societal concerns growing about climate change. And that’s really pushed governments and companies and consumers to to really think hard about our dependence on fossil fuels,” Takahashi said.