Why Oil Workers Are Still Paying $600 To Live In A Closet

Gas may be cheaper, but oil town residents are still paying New York City rents.

By Emily GuerinApril 21, 2015 5:46 am

This story originally appeared on Inside Energy

Oil prices have fallen by over half since last summer. In oil producing states like North Dakota, that’s caused widespread layoffs and a huge slowdown in oilfield activity. But one thing hasn’t changed — rents. In and around the Bakken oil field, they are among the highest in the nation.

Oil worker Shane Bookout knows this firsthand. He has been looking for a place to live for weeks in Williston, North Dakota, the town at the heart of the oil boom. He recently checked out a tiny house whose owner rents all her bedrooms to oil workers and still lives there herself. She’s also thrown up some makeshift walls and doors in the basement to create more rooms. Bookout said they felt like closets, they were so small.

When the owner told Bookout she wanted $600 a month in rent for these tiny rooms, he kept his shock to himself.

“I wasn’t rude by no means,” he said in his Oklahoma drawl, “I just told her it was probably just too little for me.”

Bookout is incredibly polite: He calls me ma’m in conversation. But on the inside, he said he was fuming.

“I think it’s ridiculous. They’re screwing over the guys who work up here.”

That’s a common sentiment in the Bakken. In Williston, the average renter pays $2200 a month. Rent averages $2800 a month in Watford City. For comparison, average monthly rent in New York City is $2895 and $1800 in Denver, according to Trulia.com‘s rent monitor.

Population growth is the heart of the problem. In Watford City, for example, the population has doubled in three years. Despite falling oil prices, there’s still too many new people and not enough housing.

Las Vegas-based developer Focus Property Group is one of the many out of state developers still cashing in on the boom. They’re currently turning a wheat field outside Watford City into 18 high-end four-plexes.

Co-owner Darrin Badger says, given the supply-demand mismatch, he’s not too worried about whether falling oil prices will make it harder to fill his units. But the boom-bust nature of the local economy did make it very difficult for him to attract investors.

“I mean, even today when you say I’m developing in North Dakota, people look at you and go, why?”

At the other end of the housing spectrum is North Gold RV Park in Ross, North Dakota.Rows of campers insulated against the harsh winter sit along a muddy gravel road. There’s a view of the many oil trains that pass through less than 100 yards away.

Rent here is $800 a month, and includes electricity, sewer, water and WiFi (heat is separate).  I asked the park’s manager, Don Mathis, if he thought that was a good deal.

“Being that we are in the Bakken, yeah. I do think that is a good deal,” he said after a pause. “I mean you could get the same thing with paved roads, swimming pools and movie stars down South, but we’re not in the South. We’re in the North.”

Mathis’ boss is RV park owner Howard Fairbanks. When I reached him on his cell phone, he was on vacation in Hawaii. He says the RV park has been a great investment.

“In fact of all the things I’ve ever done, I’ve never made more money.”

 He agrees the rent is pretty high, but says he wouldn’t consider dropping it.

“I’m literally charging what the market bears, and unfortunately the market bears really high prices cause there’s so many people that need housing and there just isn’t enough.

Oil worker Shane Bookout thinks Fairbanks’ philosophy is “pretty ridiculous.” He says once there’s more housing options and rents begin to drop, landlords like Fairbanks will get driven out.

In fact, he’s so disgusted by the greed he’s seen in the Bakken, he’s done something to try to combat it. In his last job, his company put him up in a three bedroom mobile home by himself. It seemed like kind of a waste of space and he wanted to help out other workers, so he put an ad on Craigslist saying hey, I’ve two extra bedrooms that I’m renting out. For free. Eventually he did find a few guys to move in, but a lot of people didn’t believe him.

“For all these people to have gotten screwed over so much and heard so many horror stories and just worried that someone is out to get them whenever somebody is actually just trying to help somebody else out, yeah it’s pretty sad,” he said.

If people keep leaving the Bakken due to low oil prices, and if new construction keeps coming online, eventually it might be a more affordable place to live. But the bitter memories of when it wasn’t could linger for a long time.