What for much of the United States would be good news — cheaper oil — in West Texas has become a cause for concern. And, in Midland, one of the hearts of the Permian basin and symbol of the fracking boom, the fall in crude oil prices threatens to chill an economy that lives and breathes energy.
Since last spring, the price of oil has been declining. Added to this is the White House’s strategy of pressuring to increase Venezuelan production, a maneuver that, according to various information, former President Donald Trump considers key to pushing the barrel towards $50. However, in Midland, that This figure is not perceived as a victory for the consumer, but as a direct blow to the local industry.
The signs of the economic slowdown are beginning to be visible. Restaurants with fewer customers, empty hair salons and businesses linked to the oil sector adjusting expenses are part of the new landscape. Almost new Ford F-150 trucks appear on local buying and selling platforms at unusually low prices, a reflection of the uncertainty among workers in the sector.
“If you want a new jet ski, now is the best time to buy”said Taylor Sell, CEO of small producer Element Petroleum, ironically when describing the cooling of the market.
The problem is structural. With crude oil below $60 a barrel, many companies are barely managing to keep existing wells running and postponing opening new ones. In addition, tariffs have made essential materials such as steel pipes and chemicals more expensive, further reducing margins. “We’re not drilling right now,” Sell acknowledged.
The consequences reach employment. Oilfield services companies have reduced staff or cut hours. Kyle Patterson, director of the Buckeye firm, specializing in drilling fluids, explained that they had to lay off about 10% of their staff in the last year due to lower activity. “You can’t sit back and wait for the market to recover,” he said, while admitting that even his own salary could be affected.
According to industry data, the number of active platforms in the Permian Basin has fallen by around 14% year-on-year. The lower disposable income of workers is transferred to the rest of the economy: hotel occupancy fell by more than 5% in the last year and local consumption suffers.
The fear in Midland is that this time the crisis will not be brief. Ben Shepperd, president of the Permian oil association, warns that a prolonged period of low prices could force the closure of more wells and increase the United States’ dependence on foreign crude. “It has really cast a shadow over the Permian”he stated.
For many in the area, the “ideal” price of oil is around $80 per barrel. Bubba Dobson, a commercial representative for a company that rents drilling equipment, maintains that this level allows relatively cheap gasoline without suffocating the national industry. Although he understands the geopolitical argument of reactivating Venezuelan oil, he rejects that the US depends on imports. “We are sitting on a gold mine; we can produce enough to supply ourselves,” he defended.
Midland, known as the “Tall City” for its buildings visible for miles in the flat West Texas landscape, grew at the pace of oil for more than a century. Today it counts with about 143,000 inhabitants and a third of its employment is directly or indirectly linked to energy extraction. Luxury car dealerships, million-dollar developments and private jets coexist with modest neighborhoods that depend on the pulse of crude oil.
Not everyone still feels the blow with the same intensity. Some traders believe the harshest effects will take months to arrive. “It will be a year from now when we will really start to feel the pain”said Pat Dennis, who rents oil well tools and, for now, is celebrating paying less for gas.
The unrest is also beginning to touch politics. Trump swept Midland County in the last election and oil companies have historically been big Republican donors. Still, some voters are beginning to question whether the cheap oil strategy benefits their community.
This disenchantment is especially noticeable in small businesses. Nemecio Torres, co-owner of two restaurants, said that one of them saw its income drop by nearly 30% in the last year, forcing him to lay off employees and drastically reduce his own salary. “We thought it was going to help the economy here in West Texas,” he lamented. “Some months it was even slower than during Covid.”
Meanwhile, in neighboring cities like Odessa, where lines of oil workers once formed collecting checks worth thousands of dollars, the income is now smaller and less frequent. “It’s an oil city, but it doesn’t feel like one anymore,” summarized a local merchant.
