Oil price war and coronavirus "a double whammy" for Texas city's economy
With people staying home and not traveling during the coronavirus pandemic, the demand for oil has plummeted. A key benchmark determining crude oil prices fell below zero for the first time ever Monday.
Low oil prices can be disastrous for regions that rely on drilling and fracking for jobs and tax revenue.
In Midland, part of West Texas, Kris Dokey, a fourth-generation Midland oil field worker, was laid off last week like so many Americans. But, unlike others, coronavirus isn't the main culprit.
"We got hit with a double whammy ... between the Saudi and Russia price war that started right about the same time the coronavirus hit," he told CBS News correspondent Janet Shamlian. "Kind of unprecedented times for us out here."
"Out here" is the Permian Basin, which Midland is part of. The region produces roughly a third of U.S. oil. It had been booming with new construction everywhere. Then, the price war and coronavirus sent prices spiraling.
The city of about 140,000 now tops the list of those that would be hardest hit by a recession, according to the public policy group, The Brookings Institution.
"It's like someone hit the switch. All of a sudden, layoffs already start. All of a sudden, the city starts to slow down, and you can literally feel it," said Midland Mayor Patrick Payton.
Payton said once coronavirus hit, it grounded planes and kept drivers off the roads, dealing a devastating blow to demand for oil and bringing Midland to its knees. Now, one of the city's best restaurants, Opal's Table, is a food pantry, providing free lunch for first responders and anyone who cannot afford to buy groceries.
The outlook isn't good. Payton said because so many jobs are oil-related, the region will recover behind the rest of the country.
"It's probably at least a two-year lift for us to get this economy moving again. This boom we were in was about a five-year run. It took us a week to lose it," he said.
For the Dokey family, two years is an eternity. Their savings won't last that long.
"My main goal is to feed my family, but shortly thereafter that is to continue to provide them shelter for them to lay their heads down at night," Dokey said.
Rig workers, engineers and the thousands of others in the industry previously had little trouble finding other work during downturns, but in the world of coronavirus, no one is hiring.
