29THEBOTTOMLINE A pricewaramongtheworld’stopoil
producersandthespreadofthecoronavirusthreatentohitTexas
hardandcouldupendpoliticsin thetraditionallyRepublicanstate.theU.S.asa whole,it wouldbea comedownforthe
LoneStarState.“Rightnow,therearebumpsinthe
road,”saysJasonSchenker,presidentofPrestige
EconomicsLLCinAustin.“Wecouldseemorethan
bumps—potholes.”
Texasboastsmoreenergy-companyheadquar-
tersthananywhereelseontheplanet.From 1997 to
2017,thebusinessofoilandgasextractioncontrib-
utedaslittleas3%toasmuchas12%ofthestate’s
grossdomesticproducteachyear.Butthere’salso
beena consistentuptickinjobsina rangeofother
fields,includinghealthcareandfinance.“Thenon-
energypartoftheTexaseconomyhasbeengrow-
ingsostrongly,”saysRobertDye,Comerica’schief
economist.“That’sa majorstabilizingforce.”
Willit beenoughtoabsorbtheblowfromthe
oilpriceplunge?
It’sa politicalquestion,too,becausea strong
economyinTexaswouldbenefitPresidentTrump,
whereasweaknesscouldhelphisDemocratic
opponentinNovember.Changingdemographics—
notably an influx of young professionals—make the
state competitive after a generation of GOP domi-
nance. Trump won Texas by 9 percentage points in
2016 but now leads former Vice President Joe Biden,
the likely Democratic nominee, by less than 3 per-
centage points, according to a RealClearPolitics
average of recent polls.
In the Permian Basin in West Texas, where
half of all U.S. oilfield work occurs, spending by
producers is expected to drop 40% by yearend,
according to Coras Research LLC. Across the U.S.,
1,500to3,000oilfieldservicejobscouldbeaffected
inthenexttwomonths,saysMattJohnson,chief
executiveofficerofPrimaryVision,whichtracks
industrydata.
ExplorersinthePermianneedoilabove$47a
barreltobreakeven,accordingtoanalysisfrom
BloombergNEF,BloombergLP’sprimaryresearch
service on energy transition. Energy compa-
niesoperatinginthebasinhadalreadystarted
toreininactivitylastyear,drivenbyWallStreet
demandstocutdebtanddelivermoreprofitsto
shareholders. Several have instituted hiring freezes,
says Sam Cross, a senior vice president for Airswift,
a recruiter. Halliburton Co., the world’s biggest pro-
vider of fracking services, announced on March 17
it will furlough about 3,500 workers at its Houston
headquarters. “Among staff and candidates, there’s
a lot of fear,” says Cross.
Worries about how the industry will ride out the
latest oil price bust are rippling across Texas. “It’s
scary, but I’m trying to stay positive,” says César
Lozano, who opened Papa Tacho’s in Midland after
the last downturn in 2016. He’s opening a second
location of the Mexican restaurant, which is packed
with workers sporting steel-toed boots and oilfield
logos during lunchtime. “You can’t have your ups
without your downs,” he says. “People here are
resilient. We’ll find a way.” �Rachel Adams-Heard,
David Wethe, Steve Matthews, and Reade Pickert▲ Pecos, Texas, grew
rapidly as the shale
boom attracted workers