Coronavirus and downturn slam America’s oil patch
HOUSTON — In the days and weeks before coronavirus cases began spiking in Texas, Chris Williams had already sensed trouble brewing for the state’s energy-dependent economy.
With a Russian-Saudi oil price war flaring and U.S. crude flooding the market, Williams’ projects designing oil pipelines at the Houston-area office of Wood Group were being canceled. And then came the virus.
“We went from a crew of 70 to 80 people down to about seven,” Williams said, a downturn more rapid and widespread than he and other industry veterans have ever seen: “From one week to the next, we were seeing massive shutdowns.”
Williams, who has 15 years of experience in the oil sector, worked from home until the last week in March, when he was laid off. Friends and neighbors fear they could be next, what with the price of U.S. crude oil having gone negative for the first time in their lives.
“There are a lot of people that are hanging on by a mere thread,” said the 42-year-old father of four. “This turned everybody’s life upside down and did it quickly. A lot of people were not in a position to rebound.”
America’s oil patch has been hit in recent weeks by a double economic whammy: a global pandemic amid an already weakening market, resulting in the worst oil bust in a lifetime. The impact is widespread, felt by California workers from Kern County oilfields to the ports of Los Angeles and Long Beach, where dozens of oil tankers have languished, unable to offload an oversupply of crude. But in Texas, the layoffs have been particularly intense.
Thousands of energy sector workers have been laid off in Texas in recent weeks. More than half of oil and gas workers worry they could lose their jobs because of the pandemic, and nearly 40% are concerned they won’t be able to pay the mortgage and other bills during the coming year, according to a University of Houston survey of primarily Texas workers.
Notifications of mass layoffs at Halliburton, Apache Corp. and other energy companies have flooded the Texas Workforce Commission. Houston-based energy companies reported staggering losses last week, including ConocoPhillips — $1.7 billion — and Diamond Offshore Drilling, which filed for bankruptcy with debts of $2.6 billion.
The Houston area alone may lose up to 300,000 jobs, worse than during the 2008 recession. The cutbacks are expected to have a ripple effect on museums and nonprofits reliant on oil and gas philanthropy.
“People outside of Texas don’t realize how much revenue, how much lifeblood, oil brings,” Williams said.
For the first time, his family sought help from Houston Food Bank, where they once volunteered, the largest in the country. Thousands joined them at a drive-through food giveaway last month, including middle- and working-class neighbors who lost jobs in oil and gas.
Williams noticed beat-up pickup trucks and also Maserati sports cars.
“It doesn’t matter where you fall on the socioeconomic spectrum: This outbreak didn’t discriminate,” Williams said.
Josefina Rosa, 46, and her husband lined up in their pickup for a food giveaway Saturday at a church to the east of Houston in Baytown. The church is ringed by refineries that have supported the couple and their parents. Salvador Rosa, 45, worked as a contract boilermaker until he was laid off March 27. Neither has a college degree.
They had never visited the food pantry before, and although they’ve paid off their home and truck, they support four daughters — including making car payments for the eldest two, who just became registered nurses.
“There’s no work” in the refineries, Josefina Rosa said. “All of our neighbors have the same issue. We’re just trying to survive.”
Nikki Rincon, executive director of Hearts and Hands of Baytown, a ministry of Iglesia Cristo Viene, said many of those she had seen in recent weeks had been employed at nearby refineries. Rincon’s husband works for Exxon, which subsidizes volunteers at the food pantry.
“You’ve got Exxon, Chevron, Covestro that way,” she said Saturday, pointing to nearby refineries whose metal towers filled the horizon. “This is how people live. It’s our bread and butter.”
Ed Hirs, who testified at a recent meeting of the Texas commission that regulates oil and gas, said it would be at least a year after the pandemic withered before oil prices, and the industry at large, recovered. The state commission is set to vote Tuesday on a proposal to cut Texas oil production by 20%, which would take about a million barrels a day off the market.
“The oil patch was in trouble before COVID hit,” said the University of Houston energy economics teacher. “They’re going to be cutting.”
Oilfield outposts in Texas and other states are expected to suffer even more than diversified Houston, the fourth-largest metro area in the country, he said.
West Texas cities such as Midland and Odessa, dependent on oil drilling — which had boomed in recent years due to hydraulic fracturing, or fracking — have seen business dry up in recent weeks as wells are plugged to store the oil until its value increases. Each well fuels 25 to 100 full-time jobs.
“That supports families, schools, property taxes,” Hirs said, and as job losses mount, “folks will be selling their houses.”
“That’s going to drive down the value of houses,” he said. “That’s going to drive down property taxes.”
The effect of the oil slowdown isn’t limited to Texas, he said: Fracking has slowed in Colorado, North Dakota and Oklahoma. Some companies are paying to convert tanks used for fracking oil to store it for at least a year, while others are signing yearlong leases to store oil in offshore tankers, he said.
Williams, a 2007 University of Southern Mississippi graduate, had moved to Houston for the promise of a well-paid oil job with generous health insurance for his family. He survived the 2008 recession and another downturn in 2016 but said those paled in comparison to the current downturn.
In addition to losing his job, his wife, Demetris Williams, 43, employed at the local school district, lost her part-time work at Old Navy. Their eldest son, Chris Jr., 18, also lost his part-time position at the clothing store and has been applying for other jobs without luck. Their household income fell from $75,000 to about $20,000, Williams said.
Williams has applied for every job he can find online, including minimum-wage positions at groceries and at retail stores that reopened in Texas on Friday. He reached out to friends, trying to network his way into an architecture, construction or project management position. But the oil slowdown has affected those industries too, and he had yet to hear back. He hasn’t applied for jobs overseas — he doesn’t think his family is prepared for that kind of change — but has considered moving elsewhere in the U.S.
“It’s really quiet. There are jobs out there, but there are so many people out there looking,” Williams said.
He has mixed feelings about Texas reopening businesses at 25% capacity. Although that might make it easier for him to get hired, he worries those sorts of jobs would put him at greater risk of catching the coronavirus and passing it on to his family. His youngest son, 10-year-old Manny, has a compromised immune system after having survived leukemia.
“I’m ready to get back to work, but my family’s safety should be put at the forefront,” Williams said as he stood in his yard with his wife and children last week, wearing a mask with the Houston Texans football logo.
They’re not sure what to do about health insurance, which they lost when Williams was laid off. Texas has the highest number and percentage of uninsured residents of any state and is among more than a dozen states that opted not to expand Medicaid before the outbreak.
“We’re just hoping that none of us gets sick,” Williams said.
He and his wife have been negotiating with creditors, trying to stay current with the $1,700 rent on their four-bedroom house and the last few payments on their Chevy Silverado. Williams likes to tell his children, “It could be worse: We could be living in that truck.”
In recent weeks, their small savings has dwindled. They visited a Houston Food Bank giveaway and waited three hours before leaving empty-handed — the line was just too long, Williams said. They returned for another giveaway and received a trunk full of food, including milk and fresh fruit.
Demetris Williams set out to attend another Houston Food Bank event near their suburban home Wednesday, but the lines stretched for miles, and she eventually returned home (more than 7,000 drivers received food).
There would be another food distribution Saturday, at Houston’s NRG Stadium, named after a Texas energy company. Houston Food Bank, the country’s largest, has been distributing twice as much food as usual, up to a million pounds a day, spokeswoman Paula Murphy said. Many of those newly in need have lost jobs in oil and gas, she said.
“We are such an oil city. It’s creating a whole new audience that needs the food bank,” she said.
Among those who picked up food Wednesday was Tam Bui, driving a silver Mercedes SUV. She said her husband had been notified he was being laid off from his oil and gas computer programming job this coming Sunday. Bui, 46, worked at a hair salon that closed during the pandemic, and she takes care of their elderly parents. One of them has lung cancer and so is at even higher risk of severe illness or death from COVID-19.
“We’re OK for now,” she said, “But we need health insurance.”
Another woman who asked not to be identified said she was picking up food for neighbors who had lost their jobs in the oil and gas industry. She said her husband was at work on an offshore oil rig until this week, but she worried about his job, too. She pulled up to the drive-through food distribution with their 6-year-old daughter in the back seat.
“We never thought we would see something like this,” she said.
The Williams family has managed to economize while sheltering at home during the pandemic.
They celebrated their daughter’s sweet 16 and son’s 14th birthday last week with family Zoom calls, dinners at home, outdoor decorations and by waving to neighbors on their cul-de-sac. The couple each received $1,200 federal stimulus payments and added assistance for their children, as well as unemployment for Williams.
They are debating whether to send their eldest son to college next fall, waiting to see what financial aid he’s offered and whether classes will be held on video at the state school where he’s been accepted and hopes to play football, Prairie View A&M.
Williams has been reassuring himself that the Texas oil industry is cyclical. For every bust, he said, there has always been a boom.
“I just don’t know when it’s going to turn around,” he said.
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