West Texas’s economy is thriving as crude oil prices push within a few dollars of $70 a barrel, lifting employment and wages as companies compete to hire and retain labor, Reuters reported Tuesday.
Midland and Odessa, two Texas towns at the center of the oil boom, have unemployment stats far below the national average of 4.1 percent. Midland’s unemployment measured 2.5 percent in February while Odessa’s hit 3.1 percent.
“It is a full-fledged boom,” ProPetro CEO Dale Redman told Reuters.
Redman’s Midland-based oil field service company provides equipment and machines for oil company use at oil well sites.
West Texas Intermediate, the domestic benchmark for crude oil, was trading at $67.97 Tuesday morning, according to the Wall Street Journal. Although the price was a drop of about 1 percent on Monday, more efficient drilling methods and the development of new technology in recent years has made drilling for oil at any price above $25 a barrel profitable in Texas and New Mexico’s Permian Basin oil field.
“$60 is like the new $100,” Dallas Fed economist Michael Plante told Reuters in a mid-April interview.
Oil output in the Permian Basin has tripled in three years after the U.S. lifted a ban on exporting crude oil in 2015. Domestic oil production further swelled after the Organization of Petroleum Exporting Countries (OPEC) and several other oil-producing areas, including Russia, partnered together to try to balance out the world’s supply of crude oil, according to Marketplace.
The agreement, led by Saudi Arabia and Russia, sought to deal with an international glut of oil by cutting production in all countries involved. The sudden decrease in oil supplies presented U.S. oil producers with new opportunities in countries previously supplied by OPEC and its allies.
“U.S. oil is on offer everywhere,” a trader with a Mediterranean refiner, who recently started buying U.S. oil, told Reuters. “It puts local grades under a lot of pressure.”
Back in West Texas, wages have skyrocketed because of the boom along with the prices of local products. Redman’s company pays about half of his 1,200 person workforce at least $100,000 a year.
Local restaurants are increasing pay, too, to keep workers, but the costs are being passed on in the form of higher menu prices. Rents in the area, Reuters reported, have also increased by as much as $1,000 in one year.
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