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In oilfields, salaries that boomed suddenly bust

Leigh Paterson Sep 14, 2015

In oilfields, salaries that boomed suddenly bust

Leigh Paterson Sep 14, 2015

With oil hovering around $45 a barrel these days, oil workers can go from making six figures a year, including overtime, to being unemployed and broke. When business is good, a $60,000 truck, for example, might be a reasonable purchase and maybe even a business expense. But the oil industry isn’t like most businesses. Work can go away overnight. That is what happened at an oilfield services and rental company called NewKota.

Jordan Couch, 22, is a cowboy from Idaho and now a supervisor at NewKota in Gillette, Wyoming. The company recently laid off almost all of its employees, but Couch was one of the few who stayed on.

Couch didn’t lose his job because he was one of the only employees who had his own housing. But the company didn’t have any work for him for a few months, so he wasn’t getting paid.

“I had like maybe three grand saved. I went through that in two or three weeks,” Couch says. “Truck payment $1,000 a month; rent payment, $1,000 a month; food, and then everything else.”

By the time work picked up, Couch says he was already two months behind on truck payments and was almost evicted from his apartment. One of the problems, he explained, is that oilfield money can change spending habits. When he was a cowboy, he didn’t make much money, and so he didn’t spend much money. But then he started working in the oilfields.

“So you’re going to the bar and it turns into $500 a night because you’re drunk buying Patron for everybody sitting at the bar,” Couch says with a laugh.

That is where his boss, Justin Gamble, 32, steps in as a sort of financial advisor.

“They blow every penny they get,” Gamble says. “They make more money than they’ve ever made before. I tell them all the time. They need to save their money.”

The two men agreed that none of the younger guys ever take that advice.

But maybe they should. Gamble has been through downturns in the energy and steel-making industries. He also got divorced and now pays child support, so he knows that the money doesn’t always last.

“Nothing is secure. Unless you’re making toilet paper, I guess,” Gamble says.

According to the Bureau of Labor Statistics, the U.S. has lost around 5,000 oil and gas jobs over the past year. That number represents a relatively small decrease of 2.4 percent, but could indicate the beginning of a continuing downward trend.

That is what banks are worried about.

Kurt Thelen, the CEO of Campco Federal Credit Union in Gillette, explains that according to his most recent records from the first six months of 2015, the dollar amount in losses of Campco’s loans hasn’t changed much from this June to last June.

That lines up with federal data on Western energy states. According to the National Association of Credit Unions, credit unions in Wyoming, Colorado and North Dakota all have a lower percentage of delinquent loans than the national average.

But Thelen cautions that losses are likely there. They just haven’t shown up on balance sheets yet.

“It has been more of just the last 60 days that we have really started to see a real change,” Thelen says.

Thelen said that more people are coming into Campco because they can’t make their monthly loan payments. The number of vehicles being turned over to the credit union has more than doubled.

“We know we’ve only hit the tip of the iceberg, so it’s gonna be a matter of how low will these prices go and how long will they go,” Thelen says.

In the past, low oil prices have hit energy towns hard. During the oil bust in the mid-’80s, for example, personal and business bankruptcy filings in Wyoming were nearly triple what they were in 1980. Several local banks shut their doors.

Mark Zaback is a banker who moved to Wyoming in 1982 to work in savings and loans.

“I remember having customers who were robbing their kids’ savings accounts to make the payroll tax for their company back then,” he says. “I mean, I didn’t know if the bank I was with was going to survive. I remember thinking I might have to go bartend. I learned how to bartend in college,” Zaback says with a laugh. “I think you just go into survival mode.” 

In terms of how the boom and bust economy impacts workers, Zaback believes a big part of the problem is a serious lack of financial literacy.

“You have young people coming out of high school or college, and all of the sudden they’re getting a six-figure check,” Zaback says. “But they don’t have anybody telling them you know, you’ve got to save some of that money. They’ll go out and they’ll get a new boat, a new pickup. And they’ll qualify because they’re making a lot of money.”

Back at the bar, Couch shows me his shiny white truck equipped with air conditioned seats, Sirius XM Radio and a video screen for watching movies. Despite his recent financial troubles, he is keeping it.

“Oh, 100 percent. Even if I go back to cowboying, I’m still making $1,000 a month. I can make the payment,” Couch says. “Who eats, right?”

That is the tough thing about financial planning. Sometimes the love of a truck trumps any attempt to manage your money.

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