Riding the oil price roller coaster in New Mexico
Asked where oil is being produced in Eddy County, New Mexico, Jake Marbach has a one-word answer: “Everywhere.”
He qualifies that with, “everywhere in the east two thirds of the county.”
There’s always been oil in Eddy County. It’s one of the major oil-producing counties in southeastern New Mexico, part of the Permian Basin that encompasses much of the West Texas oil patch. But in the last few years, fracking has opened up new deposits, with names like Bone Spring and Wolfcamp, and oil companies have been hiring firms like Marbach’s Allied Land Services to find and purchase rights to do exploratory drilling. But fracking is also expensive, and the economic viability of any new wells rides on the price of oil. Not that Marbach was following it last year, when it was up near $100.
“I’d look at it and admired it about once a week, just happy it was where it was at,” he laughs. “But as far as actually tracking it? No. We were so busy and the companies kept ordering work, I didn’t pay attention to it until it really started going down.”
Last fall, he watched it with increasing trepidation as it dropped to $90, $80, $70 a barrel.
“When it went below $50, that’s when they started pulling the plug on a lot of these projects,” he says.
That happened in January, when his oil company customers cut him off en masse. He had to fire half his staff.
“I had one young guy that moved here from Fort Worth just specifically to work for me, and I had to lay him off,” he says. “That was… that was rough.”
Months later, oil has crept closer to $60, and his business is just starting to come back. You can see the mood in the records room of the county clerk’s office where landmen like Marbach do much of their work.
It’s a room with six long narrow tables that double as bookshelves for hundreds of oversized hardbacks–full of deeds and mortgages going back to the 1800s. When oil was $100, Marbach says these tables were packed shoulder to shoulder, but now there are just four people at each, one of whom is Wesley Burnett—the guy Marbach fired.
“I mean, everyone kind of knew for a couple weeks, you know,” he says of his firing. “It was like: ‘When is it going to happen?'”
He spent a few unemployed weeks doing odd jobs and watching TV at home, but he’s back doing land title research for oil companies. For now.
“That’s also a risk, like, everyone in this courthouse is taking, doing this kind of work,” he says. “They kind of know that it can end at the drop of a pin.”
But the ups and downs of oil don’t only impact the people who work for it. In fact, oil has kind of remade the city of Carlsbad.
The roads here are full of trucks: eighteen-wheelers hauling water and heavy equipment and pickups with oil company logos on the side or in the rear windshield. They fill the parking lots of restaurants like McAlister’s and Happy’s, and of the hotels that are the newest, tallest buildings in town. At least six have opened since the oil boom started.
“I would say that a good 75 percent of our guests, are tied to the oil and gas industry in some way, shape, or form,” says David Burton, general manager of the Comfort Suites, which opened in October.
Oil and gas industry workers are easy to identify, from their company shirts, company trucks or company credit cards. As the oil price fell, and companies began to cut back, they also cut back their hotel reservations — and their willingness to pay top dollar.
“Our rates have come down probably close to a hundred dollars a night,” says Burton. “They were about $350 and they’ve come down to about $250.”
For permanent housing, supply has taken longer to meet demand.
“We were short on housing before the oil boom started,” says Jeff Campbell, director of marketing and business development at the Carlsbad Department of Development.
That housing shortage worsened over the last five years, as the oil boom nearly doubled the population from under 30,000 to what Campbell tallies at more than 50,000 people. (This count is based on water usage and Campbell believes is more accurate than the lower Census figures.)
“Right now when the oil play is down a little bit it gives a little bit of a chance to catch up,” he says.
The “catching up” comes in the form of new multifamily housing like the Copperstone Apartments, where contractors were recently spreading cement onto the last few two-story buildings.
“Oh yeah, there’s a lot of work right here, bro,” said Cesar Enriquez as he rinsed cement off his tools. “There’s a lot of work right here and in Hobbs, too.”
Hobbs is another town in New Mexican oil country — where you can be sure a lot people are hoping the oil price rebound continues.
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