Boom Town, the 1940 movie about the early oil patch days starring Clark Gable, Spencer Tracy and Claudette Colbert, has nothing on what has been and is going on in Texas and the expanding oil patch the past 10 years.
Whether one is in the historic capital of the oil business, Houston, the Permian Basin metropolis of Midland/Odessa, or points in between, the effects of this second millennial oil boom are deep and far-reaching—just like the technology that has fueled this phenomena. It’s not only the Big Oil Seven Sisters, but thousands of Gable and Tracy-esque wildcatters, wild-eyed dreamers and risk-takers, who have laid it on the line and come up a winners.
Over the years, technology, like the invention of seismic in 1921, the diamond drill bit of the 30s, 3D seismic in the 70s, and the hydro-Sulphuric franking of present times, has always spurred ‘new’ finds and better recovery methods of existing fields. There’s also a key benefit to this: significant job creation.
From the roughneck on the rig to the engineers, the technology people creating new tools to the operators, the administrative staff to the bankers who finance these projects—and, yes, to the real estate owners, managers, and brokers who benefit from the job growth and capital created in this industry, the oil industry has a significant impact on the entire economy. (Some West Texas high school graduates are deferring college by getting jobs in the oil patch—getting paid $70,000 per year to drive trucks, for example—saving their money to pay for their own schooling. No student loans … imagine that. Paying as one goes, not mortgaging one’s future.)
While recently touring West Texas, looking for locations for a soft goods retailer, which is expanding and creating more jobs, we witnessed this boom first-hand. Apartment complexes in the area are full with waiting lists, houses are being built and sold to people with real jobs, shopping centers have no vacancies, hotels are fully booked and some are even ‘hot racked.’ This is a hotel booking practice where one resident gets the room for 12 hours, and then in comes guest number two. And all of these folks need clothes, food, furniture, vehicles, and entertainment; they’ve got disposable income, and plenty of it. It’s retailer ‘s dream.
Restaurants are packed at all hours, traffic is Manhattan-like. (Well, maybe Addison-like, but it’s crowded.) Jobs have been created, sustained, and expanded. The Reagan philosophy of trickle down economics is certainly working in the oil patch, although it is more aptly labeled a gusher-up philosophy. The money made (not printed at the Fed) out of the ground, fuels these jobs and builds wealth for the risk-taker and anyone willing to WORK for their piece of the American dream.
So the next time you fill up at the pump and complain about the price, think of the big picture and be thankful this oil money can be used to build our economy, invest in our schools through ad valorem and severance taxes, and re-invest in the United States, where it can continue to fuel all of our growth for years to come.
Frank Bullock is managing director of tenant advisory retail operations for Transwestern. Contact him at [email protected].
