At a Burger King outlet in central Hobbs, New Mexico, a new sign has been installed across the front window: “Now Hiring: Cooks/Cashiers Apply Inside!”
Similar notices are scattered throughout the city’s major shopping plaza: Pizza Hut, Little Caesars, T-Mobile, CVS, K-Mart, Kwikcuts and the Neighborhood Barbershop all advertise vacancies.
A boom is underway in this dusty, sun-bleached desert town: unemployment is plunging, wages are soaring, and new tax receipts are flowing into state coffers. An increase in crude oil production from the Permian Basin, a vast hydrocarbon trove that stretches across western Texas and southeastern New Mexico.
While other US oilfields are in decline, Permian output hit a record high last year as Russia’s invasion of Ukraine helped boost energy prices. At 5.6 million barrels per day the field accounts for nearly half of all oil produced in the US, pumping more than many OPEC countries. New Mexico’s crude production capacity surpassed production from the entire country of Mexico last year.
Unemployment in the US oil and gas industry fell below 2 percent in December, down from 6 percent a year ago — the lowest in a decade, according to the Bureau of Labor Statistics. That’s in stark contrast to sectors of the economy reeling from rising interest rates: Tech companies have laid off nearly 230,000 workers since the start of 2022, according to layoffs.fyi, which aggregates job cuts.
About 1,500 miles from Silicon Valley, the commotion in the Permian is palpable. Oil and gas producers deployed 350 drilling rigs in the region last week, up a fifth from the same time last year, according to data compiled by Baker Hughes. Other jobs 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 retrieved trolleys strewn across the plaza car park from a nightly influx of oilfield workers. “Employment is at an all-time high . . . Everybody’s looking for somebody.”
Outside of Hobbs, oilfield traffic weaves through winding county roads with names like Battle Axe and Oiler. Lorries loaded with sand and gravel speed down the highways, pick-up trucks haul trailers carrying shiny new diggers; SUVs cart diesel engines and coils of piping.
His passengers are suddenly making big bucks. Roughnecks in New Mexico can command rates of more than $27 an hour, according to consultant Ristad Energy, up from $18-20 a year ago. A commercial trucking license alone is enough to earn a driver over $100,000 in salary without a high school diploma.
“Most entry-level jobs right now are anywhere from $15-20 an hour — and often more at the higher end,” says Sam Cobb, mayor of Hobbs. “It’s a great opportunity for people who don’t have it [privileged backgrounds]. Unless you’re an engineer, you don’t need to go to college to become an entry-level worker in the oil and gas industry.
Lee County, where Hobbs sits, now produces more oil than any other county in the US from wells operated by companies including listed Devon Energy and EOG Resources. Rising production has boosted tax receipts for New Mexico, a state historically with one of the highest poverty rates in the nation. The state budget has jumped from less than $6bn four years ago to nearly $9.5bn this year, with a boost to education, housing, health and infrastructure spending.
“It’s just amazing,” says Kathryn Brown, a Republican lawmaker in the New Mexico state House of Representatives. “It’s definitely a boom — but it’s bigger . . . than anything we’ve seen before. It’s unprecedented.”
Hobbs knew booms and busts firsthand. In the 1980s, when oil prices fell to historic lows, cars in town had bumper stickers that read, “Can the last guy out turn off the lights?” The onset of the pandemic in 2020 effectively brought oilfield activity to a halt as prices fell again, leaving workers desperate.
The mood is different now, with experts forecasting record global oil demand this year and crude prices steady around $80 a barrel.
Plum salaries in the oilfields have drawn workers away from traditional service jobs like retail and hospitality, leaving restaurants operating at half capacity due to staff shortages. Others have raised wages in an effort to compete: Burger King is offering up to $28 an hour to flip burgers, compared with an average pay of $19 in high-cost New York.
“Trying to get recruited into oilfield jobs which are quite tough. But recruiting in retail jobs is very difficult,” says Jennifer Grasham, who runs the Lea County Economic Development Council. “I would say everybody is looking for people. It doesn’t matter if it’s retail or the oil field.
Hotel rates are rising, rooms are overbooked midweek to accommodate visiting workers. Insignia Hospitality, which operates a portfolio of more than 20 hotels throughout the Permian, is opening a new Hilton franchise in Hobbs next month, its fourth location in the city.
Rachel Overman, chief operating officer at Insignia, is optimistic. “Otherwise,” she said. “We will not build a new hotel there.”
Lee County’s unemployment rate was 3.7 percent in November, roughly in line with the national average. Locals say the ground reality in the county of 73,000 people is an even tighter labor market.
“There’s an unemployment number. But I think my personal opinion is that those people don’t want to work — because there are jobs,” says Dustin Armstrong, head of the local chamber of commerce. “We’re in the busiest oilfield 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 rather than splurged on drilling binges. And in many parts of the country, the best acreage has already been drilled.
Oil producers now complain about rampant cost inflation, with the US shale sector as a whole struggling to increase oil supply as quickly and easily as in the past. On top of this, efforts to wean the world’s largest economy away from oil and gas in favor of cleaner alternatives are gaining momentum.
But in the Permian, America is confident that it will continue to explore the hydrocarbons it produces for a long time to come.
“Because we do business here we look at the whole energy mix dilemma through a different lens,” says John Yates, chief executive of local producer Abo Empire. “The Permian Basin is more than 100 years old but that doesn’t bring us to a pile of dinosaur bones.”