Area economy struggles

While Odessa struggles with an unemployment rate approaching 10 percent, some areas of the Permian Basin are seeing even more economic turbulence.
Reeves and Pecos counties, both of which are reliant on natural gas for jobs, have seen dramatic increases in unemployment over the past year. While oil prices, which drive the economy in much of the area, have rebounded to the $70 range per barrel range, natural gas prices remain near a seven-year low.
For July, the last month in which statistics are available, Reeves County had the highest jobless rate in the Permian Basin at 14 percent, up from 6.9 percent a year earlier. According to the Texas Workforce Commission, 646 people out of the county’s labor force of 4,618 were unemployed.
Pecos County, meanwhile, has seen its unemployment rate jump from 5.4 percent in July 2008 to 12.3 percent in July of this year. It has 877 unemployed residents out of a workforce of 7,157.
For Reeves County and its county seat Pecos, the problems go beyond a short-term drop in jobs, said Robert Tobias, executive director of the Pecos Economic Development Corp.
“We’re working extremely hard to attract a diversified industrial base,” he said. “We believe that will attract jobs, and not only jobs, but higher-paying, higher-skilled jobs.”
But the community now suffers from a lack of educated, skilled workers, Tobias said. He hopes the future will be better with the help of entities like the Odessa College Technical Training Center there.
“I think there’s a little bit of a disconnect between people and the requirements to get a job,” he said.
Along with natural gas, Tobias said the Reeves County Detention Center and TransPecos Foods drive the job market in Pecos. But the frozen food processing plant has gone from more than 700 employees to around 100 since its former owner shut the plant down in 2002.
And a lack of jobs means a lack of spending. While a drop in sales tax receipts of 25.88 percent sent shockwaves through Odessa, it was minor compared to the figures for Pecos.
In the Reeves County seat, sales tax receipts were down 51.89 percent from a year ago, according to sales tax figures released last week.
“When you have unemployment, you have a lack of purchasing opportunity,” Tobias said.
In Pecos County, located just southeast of Reeves County, the decline in natural gas prices have hit the economy hard, largely with rigs being stacked by companies like SandRidge Energy, which has left hundreds out of work.
Doug May, economic development director in Fort Stockton, the largest city in Pecos County, said his area is facing the same uncertainty as much of the Permian Basin, even areas that rely more on oil production.
“I think there’s a big unknown,” May said. “The people with the capital to go out and do stuff are just scared to death.”
In addition, wind farms and other renewable energy projects that Pecos County was expecting have dried up. May said this is due to a combination of lack of transmission capacity to deliver power to large metropolitan areas and the low price of natural gas. That eliminates potential con-struction jobs.
“It makes electricity so cheap that the renewables can’t compete,” he said.
The last May heard, no new wind farms were being built in Texas.
Pecos County does have one big project to help it lessen the effects of the current natural gas drought. SandRidge is partnering with Occidental Petroleum to build the $1.2 billion Century Plant 30 miles south of Fort Stockton.
Once the plant is online, May hopes SandRidge will start drilling again in order to meet contrac-tual obligations to supply the plant.
May said the plant, which extracts carbon dioxide from gas drilled by SandRidge to be used for enhanced oil recovery by Oxy, now has 140 construction workers and will have 500 by December.
But Juanita Castro, who oversees Workforce Solutions Permian Basin workforce centers in Fort Stockton and Pecos, said more than 3,000 people had applied for jobs with the Century Plant.
“We have a lot of people come in from all over to fill out applications,” she said.
May said he recently fielded a call from someone from New Jersey looking for construction work at the plant. Because the plant is one of the largest construction projects currently in the state, people find out about it.
“That gets out on the wire service, and everybody and their dog wants to go tomorrow,” he said.
But many local residents remain unemployed. Castro said the Fort Stockton workforce center, which helps the jobless find work or obtain unemployment insurance, has been seeing about 59 clients a day.
“They’re looking for jobs and jobs are not here,” she said. “They wait for jobs a while.”
Castro, who has been with the workforce center for 32 years, said the past year has been as bad as she’s seen.
“I have never seen this before,” she said. “We had a time when we had a bust and a high unem-ployment rate, but not as bad as we see right now.”
But in Fort Stockton, she’s seeing a leveling off. That hasn’t been the case in Pecos, where the workforce center has consistently had around 34 clients a day.
“We haven’t seen anything better in Pecos,” she said.
That means short and long-term work for Tobias. He has hopes that a project with a Fort Worth company will come to Pecos that will help deliver technology that will lower costs on oil and gas projects. But, in order to get new companies to town, it will take money being spent on amenities like new roads, rail spurs and transmission lines.
“We’ve got a bunch of companies we’re communicating with,” he said. “The problem is, when you’re a small community, you lack the infrastructure to attract some of these industries.”
Even though Fort Stockton saw its September sales tax receipts drop 20 percent from a year ear-lier, May points to the bright side, noting that they are still up 20 percent from September 2007. While the turnaround won’t likely come this year, he is optimistic about the future.
“We’re working our tails off to make things happen,” May said. “We think that we will, it’s just going to take a while.”