What have you always wondered about the economy? Tell Us
COVID-19

First the virus, then the oil crash, hit Midland, Texas

Andy Uhler Apr 23, 2020
HTML EMBED:
COPY
A pumpjack in Midland. The Texas oil patch has never seen a bust like this one.
COVID-19

First the virus, then the oil crash, hit Midland, Texas

Andy Uhler Apr 23, 2020
A pumpjack in Midland. The Texas oil patch has never seen a bust like this one.
HTML EMBED:
COPY

Midland, Texas, is ground zero for oil and gas production in the U.S., and much of the local economy, in some way or another, is tied to the industry. When West Texas Intermediate went negative for the first time ever on Monday, everybody in Midland felt it — on top of the coronavirus.

This morning at about 7 o’clock, Keith Dial went to his local Albertson’s to pick up groceries. He said there were about 25 people there stocking up. Dial grew up in Midland and has been through a number of booms and busts. 

“I’m guessing we’ll have an unemployment number locally that could be well above 35%,” he said.

Dial is a partner in a Doubletree hotel in downtown Midland. He said the hotel has already furloughed most of the staff — about 80 people — because occupancy rates have plummeted. 

“On a Wednesday night two months ago, we would have rented 260 rooms probably at about a $250 rate,” Dial said. “Yesterday, I think we rented 20 rooms at about $89 rate.”

He said most of the people renting rooms during the week were tied to oil and gas — people working on rigs or executives in Midland to discuss finances.

David Blackketter said his firm often has conversations about what to do if the bottom falls out on the price of oil, but nobody was prepared for Monday’s dip into negative numbers. He’s vice president of acquisitions and divestitures for Texas Standard Oil. 

“It was kind of a shock, it was almost too surreal,” Blackketter said. “It was kind of like watching a train wreck.”

He grew up in Midland, too, and said this bust is unlike any he’s seen. When the market gets out of whack due to an oversupply, oil companies normally adjust by cutting costs.

“But the coronavirus shutting down demand for oil, you can’t cut your way to happiness,” Blackketter said.

Companies in the services industry — Halliburton, Baker Hughes and the like — have been hit the hardest because producers are shutting down wells as fast as they can, Blackketter said. 

A lot of those contractors are leaving town. That’s bad news for guys like Ray Blanchard, owner of Bean and Grape, a coffee and wine bar in Midland. 

“You know, what can we do? Where can we get revenue coming in?” Blanchard said.

They’re offering meat and cheese boards to go and selling wine at retail prices now to compete with grocery and liquor stores. He said nobody is paying to have an experience anymore. 

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

Read More

Collapse

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.