Crashing Oil Prices Decimate Texas Boomtowns

[Purveyor]

PEARSALL, Tex. – Back when the oil money flowed, the Location 581 Saloon would be crammed with pipefitters, welders, derrickhands, truck drivers and all sorts of oilfield workers – as many as 35 of them a night together shelling out more than $2,000 for drinks and good times.

These days, the bar in this South Texas city 50 miles southwest of San Antonio sits mostly empty, except for a few locals. On a recent early evening, three clients sat at the bar. Only two were drinking.

“It’s just like a ghost town again,” said Troy Reeves, the bar’s owner.

Pearsall, like other towns that sit atop of the Eagle Ford Shale and soared during the recent oil boom, has had a harrowing crash back to Earth, as the price of crude has plummeted. On Wednesday, the price of West Texas Intermediate dipped below $27 a barrel – a 12-year low. Just 18 months ago, the crude was trading for more than $100 a barrel.

Crude’s free fall has rattled world markets, erased billions of dollars in stocks worldwide and led to thousands of layoffs in the oil and gas sector. But the steady march of declining prices – with no end in sight – and recent news that lifting of sanctions on Iran could deliver even more oil to the market has nudged the outlook in South Texas from depressed to near desperate.

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http://www.usatoday.com/story/news/2016/01/20/texas-oil-prices-boomtowns-crash/79086400/

[Kelvin Mace]

1. It's not like this hasn't happned before,

once or twice a decade for the last 100 years or so.

[8 track mind]

2. my dad always told me

Stay the hell away from the oil industry. Its always feast or famine

[Hestia]

3. It's all in looking ahead

Some towns anticipated the downturn. In Cotulla, which saw a boom of hotels and revenue, city officials made sure to pay off debts on new projects and not overextend their budgets, city administrator Javier Dovalina said. A $1 million loan for a new convention center, for example, was paid off in two payments with their new oil money, he said.

Though down, Cotulla’s revenue is still way up. The city’s annual hotel/motel tax revenue soared from $44,000 a year in 2008 to $1 million at the peak of the boom before settling to just under $800,000 this fiscal year, he said. Similarly, sales tax revenue climbed from $440,000 in 2008 to $3.2 million at the peak to around $2 million today.

“We may have plateaued and we may be there for a while,” Dovalina said. “But it’s a comfortable plateau.”