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THE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & LifestyleTHE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & Lifestyle

Economy

Economy

Shale boom in Texas means low unemployment – maybe too low

Bloomberg News reports that the Shale boom is having a paradoxical effect on local economies in areas of shale production. “It’s fueling the region and starving it at the same time.” On the one hand, tax revenues have received a huge boost from shale sales, allowing local governments, such as Midland, Texas, to carry out sorely needed infrastructure repairs. On the other hand, low unemployment means that local businesses are finding it extremely challenging to retain their workers.

The government of Midland, Texas, needs an additional 200 employees if it is to function properly.

This town is in the country’s busiest shale patch, and the rig count has increased by almost a third since last year, according to Bloomberg News. The shale extraction industry, including drillers, service providers, and trucking companies, have been recruiting so many employees that they have made it difficult for other businesses and services to function.

Bloomberg news reports that so many school bus drivers were poached by the shale trucking business that students have sometimes been late to class. The George W. Bush Childhood Home, a museum that is dedicated to that president, is suffering from a lack of volunteers.

Bloomberg News reports that the oil industry has so much demand for workers that they seem to be hiring anyone with basic skills. Bloomberg interviewed Jazmin Jimenez, who is twenty-four years old and who had recently matriculated from a two-week training program at New Mexico Junior College in Hobbs, which is located a hundred miles to the north of Midland, Texas. She has been hired by Chevron Corp. as a well-pump checker. She said that “It was crazy […] Honestly I never thought I’d see myself at an oilfield company. But now I’m here — I think this is it.”

Jimenez told Bloomberg News that she now makes twenty-eight dollars an hour, which is double what she was making as a security guard at the Lea County Correctional Facility in Hobbs. Bloomberg writes that the boom will most likely end and that Jimenez said that she intends to make as much money as she can for now.

Nevertheless, Bloomberg reports that this boom could continue for a good while longer. Oil companies are as “cost-conscious” as ever. The technology for the extraction of shale oil continues to improve, making extraction quicker and cheaper in the “pancaked layers of rock in the Permian.” Shale oil now makes up for around thirty percent of all U.S. output.

The shale boom has been immensely beneficial to the region, which covers some 75,000 square miles west Texas and southeastern New Mexico. The town of Midland has seen a huge boost in sales-tax revenue. Bloomberg writes that the mayor is even considering asking for raises for city employees in order to stop them from leaving to work in the oil industry.

The unemployment rate is currently at 2.1%.

Bloomberg reports that the high demand for labor is exacerbated by the high cost of real-estate in the region. The number of homes for sale is currently the lowest it has ever been, according to the Texas A&M Real Estate Center. The average price in Midland for a home is now $325,440, which is the highest it has been since June 2014, which was the last time that oil was worth $100 for a barrel. Moreover, the average rent of an apartment of 863-square feet is $1,272 a month.

This high cost of living as adverse effects on residents of the region who are not employed by the oil industry. The Ector County Independent School District currently has more than 100 teaching positions open, according to the spokesman Mike Adkins. Bloomberg writes that “people who move are stunned by the cost of living.”

Featured Image via Wikimedia Commons


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