A Burger King store in downtown Hobbs, New Mexico has a new sign taped to its window display: “NOW EMPLOYED: COOK/CASHIERS APPLYING INSIDE!”
Similar ads are distributed to the main malls in the city: Pizza Hut, Little Caesars, T-Mobile, CVS, K-Mart, Quickcuts and Neighborhood Barbershop are all advertising vacancies.
This dusty, sun-scorched desert town is booming: unemployment is plummeting, wages are rising, and new tax revenues are pouring into the state treasury. The driving force behind all of this is a surge in crude oil production in the Permian Basin, a vast hydrocarbon field that stretches across western Texas and southeast New Mexico.
While other US oil fields are in decline, production in Perm hit an all-time high last year as Russia’s invasion of Ukraine fueled energy prices. With an output of 5.6 million barrels per day, the field now accounts for almost half of all oil produced in the US, more than many OPEC countries. Crude oil production in New Mexico last year eclipsed production in all of Mexico.
Unemployment in the US oil and gas industry fell from 6% a year ago to less than 2% in December, the lowest in a decade, according to the Bureau of Labor Statistics. This contrasts sharply with sectors of the economy hit by rising interest rates, with tech companies laying off almost 230,000 employees since the start of 2022, according to layoffs.fyi, which collects data on job cuts.
About 1,500 miles from Silicon Valley, the turmoil in Perm is palpable. Oil and gas producers deployed 350 rigs in the region last week, about a fifth more than in the same period last year, according to data compiled by Baker Hughes. Other professions followed, from truck drivers and mechanics to hotel cleaners and construction workers.
“Business is booming,” said Bruce, a 19-year-old employee at Hobbs Supermarket, as he picked up carts strewn across the plaza’s parking lot due to an overnight influx of oil workers. “The work is at an all-time high. . . everyone is looking for someone.”
Outside of Hobbs, oilfield traffic winds its way through winding county roads with names like Battle Ax and Oiler. Trucks laden with sand and gravel race down the highway, pickup trucks pulling trailers loaded with shiny new excavators; SUV trucks diesel engines and piping coils.
Their passengers suddenly earn big money. Thugs in New Mexico can earn more than $27 an hour, up from $18-20 a year ago, according to Rystad Energy consultants. A commercial trucking license alone is enough to earn a driver a salary of over $100,000 without even having a high school diploma.
“Most entry-level jobs are now $15 to $20 an hour — and usually more towards the higher end,” says Sam Cobb, mayor of Hobbs. “This is a great opportunity for people who are not from [privileged backgrounds]. If you’re not an engineer, you don’t have to go to college to become an entry-level worker in the oil and gas industry.”
Lea County, where Hobbs is located, currently produces more oil than any other county in the US from wells operated by companies including listed Devon Energy and EOG Resources. The increase in manufacturing has boosted New Mexico’s tax revenue, historically one of the highest poverty rates in the country. The state budget has increased from less than $6 billion four years ago to almost $9.5 billion this year, with increased spending on education, housing, health care and infrastructure.
“It was amazing,” says Katherine Brown, a Republican member of the New Mexico House of Representatives. “Of course it’s a boom, but it’s more than that. . . than anything we’ve seen before. It’s unprecedented.”
Hobbs has already had his ups and downs. In the 1980s, when oil prices dropped to historic lows, bumper stickers were placed on cars in the city that read, “Can the last person to leave turn off the lights?” The onset of the pandemic in 2020 effectively brought oil fields to a halt as prices crashed again, wiping out workers.
The mood is different now, as experts forecast record global oil demand this year, with oil prices stabilizing at around $80 a barrel.
High wages in the oil fields have attracted workers from traditional services such as retail and hospitality, leaving restaurants half-worked due to a shortage of staff. Others have raised wages in an attempt to compete: Burger King offers up to $28 an hour for flipping hamburgers, a job that pays an average of $19 in expensive New York.
“Trying to hire in the oil industry is hard enough. But finding a job in retail is very difficult,” says Jennifer Grassham, director of the Lee County Economic Development Board. “I would say that everyone is looking for people. It doesn’t matter if it’s retail or oilfield.”
Hotel prices are on the rise and rooms are increasingly being booked mid-week to accommodate visiting workers. Insignia Hospitality, which manages a portfolio of more than 20 hotels in Perm, is opening a new Hilton franchise at Hobbs, the city’s fourth hotel, next month.
Rachel Overman, COO of Insignia, is optimistic. “Otherwise,” she said. “We wouldn’t build a new hotel there.”
The unemployment rate in Lee County was 3.7% in November, about the same as the national average. Locals say the reality on the ground in the county of 73,000 is an even tougher job market.
“I have an unemployment number. But my personal opinion is this: I think these are the people who do not want to work – because there is a job, ”says Dustin Armstrong, head of the local chamber of commerce. “We are in the busiest location in the busiest oil field in the US.”
The current upcycle comes despite fears that the shale revolution that made the US the world’s largest oil and gas supplier is coming to an end. Wall Street is demanding that profits be returned to shareholders, not spent on drilling. And in many regions of the country, the best area has already been drilled.
Oil producers are now complaining about runaway cost inflation, which is another reason why the US shale sector as a whole is trying to increase oil supply as quickly and easily as it has in the past. On top of that, there is a growing drive to move away from oil and gas in the world’s largest economy in favor of cleaner alternatives.
But there is confidence in Perm that America will continue to devour the hydrocarbons it produces for a long time to come.
“We’re looking at the whole energy balance dilemma from a different perspective because we’re doing business here,” says John Yates, chief executive of Abo Empire, a local manufacturer. “The Permian Basin is over 100 years old, but that doesn’t make us a pile of dinosaur bones.”
