CARLSBAD – On an unseasonably hot afternoon in early November, Amber and David Templeton, who worked as crane and rigging operators, were packing their trailer to leave Carlsbad for good. Weeks earlier, their teenage son had gotten sick with COVID-19 and was too sick to travel, but he’d now recovered enough to hit the road back to Houston, their hometown.
They hoped to get a new gig once they arrived, but they weren’t optimistic: The Texas oil and gas industry had taken a huge hit during the pandemic, shedding nearly 40,000 jobs in the first half of the year – which meant the prospects there could be grim. But the prospects in New Mexico were even grimmer.
“It sucks right now,” David Templeton fumed as he washed the sleek black-and-chrome Harley-Davidson he bought during the boom, when workers like him were flush with money.
“I paid $20,000 cash for this bike, all $100 bills. Now I gotta sell it just to make ends meet,” he said. “I’ve been in this industry since I was 17 years old, and I never seen it this bad.”
For many people in this southern New Mexico city, the coronavirus has been the mother of all busts, reversing fortunes – and erasing livelihoods – at warp speed. The business losses are palpable.
In January, before COVID-19 arrived, the drive-through lines at fast-food restaurants were so clogged with local workers that getting a cheeseburger could take an hour. Guadalupe Mountain Brewing Company, a popular craft beer and pizza spot on the south end of town, couldn’t get through the day without running out of pizza dough.
“See that wall right there?” asked manager David Allen, motioning toward the back of the restaurant’s outdoor patio. “We had to build all that extra kitchen space just so we wouldn’t sell out of pizzas each day.”
Now, thanks to a thriving virus and an ailing oil industry, workers have fled, customers have vanished and Allen has plenty of extra dough – except for the green kind. The state’s COVID-19 public health restrictions were an added sucker punch, he said. And there’s been no end in sight.
In November, COVID-19 cases skyrocketed and hospitalizations increased by 231%, state health officials announced. A record-breaking 3,675 new cases were reported on a single day, Nov. 19; the coronavirus by that time had killed more than 1,300 New Mexicans, including a 12-year-old boy, the state’s youngest victim. In response, Democratic Gov. Michelle Lujan Grisham issued strict new shutdown orders that directed New Mexicans to stay home and closed nonessential businesses, a repeat of the state’s first lockdown in the spring.
Small businesses are in a stranglehold, Allen said. “Your sanitizer, your masks, all those things we have to buy now, none of that comes cheap. It’s definitely put a hurt on us.”
The pain runs even deeper in the energy industry. In April, the price of U.S. crude oil plunged below $0 per barrel for the first time in history. Companies slashed their operations in the Permian Basin and cut the number of active rigs by more than half, to an average of 45 in October, as compared with 112 just a year ago.
By May, about 4,100 of New Mexico’s oil-field workers had filed for unemployment, leading to about $500 million in lost wages and $20 million in lost revenue from personal income tax, state records showed.
Only months ago, oil workers squeezed their trailers shoulder to shoulder in places like the Sun West Mobile City, living in luxury RVs they hauled to Carlsbad from oil plays in Texas, North Dakota or elsewhere. Now, all but a handful of the 300 camper lots are empty.
From heyday to mayday
The coronavirus struck just as Carlsbad (pop. 28,000) was enjoying an economic heyday. Mobile home parks were growing, restaurants were expanding and corporate hotel chains were plowing millions into new lodgings.
Even after COVID-19 arrived, business seemed to be booming. A May economic development report by Carlsbad Mayor Dale Janway in the Carlsbad Current Argus listed more than 30 new developments underway or near completion, including apartment complexes, housing developments and banks, not to mention a Hyatt House, a Hilton, a Best Western and other hotels.
“We thought the oil boom was going to keep coming,” said Mark Christensen, whose company, the Houston-based Christensen Building Group, purchased a dilapidated, abandoned downtown building last year and transformed it into the modernized Post Time Inn.
It seemed easy back then to read the tea leaves. Major multinational corporations – Chevron, ExxonMobil and Occidental Petroleum, among others – were pouring billions of dollars into infrastructure and personnel in the Permian Basin, considered the most productive oil field in the world. Stretching 250 miles wide and 300 miles long through the deserts of southeast New Mexico and West Texas, the basin had become a mecca for operators who used horizontal drilling and fracking to extract fossil fuels from almost unfathomably large shale deposits.
It was reasonable to assume there’d be a steady stream of employees to the area needing places to eat and sleep. At a ribbon-cutting ceremony in February, Christensen watched as the mayor and other city leaders packed into the Post Time’s parking lot and beamed at the sight of the new business. For a month, oil workers, tourists and road trippers packed the motel to capacity. Then COVID-19 hit.
“It flipped our whole business equation upside down,” Christensen said. New Mexico’s public health restrictions have put the business in damage-control mode, he added.
Pumped for Trump
Locals are also struggling to recover from something a little further afield: the presidential election. Many people in this Republican stronghold refuse to acknowledge the victory of President-elect Joe Biden, in keeping with President Trump’s refusal to concede defeat.
Seventy-five percent of Eddy County voters – 17,454 in all – cast their ballots for Trump, while only 5,424 voted for Biden, the secretary of state reported. Trump yard signs and MAGA merchandise predominated all across Carlsbad.
And in retail stores and supermarkets, shoppers often went mask-free, in violation of the governor’s emergency health order. A recent trip to the local Albertsons revealed many families and small children with their faces uncovered. By Nov. 18 the store had reported five COVID-19 cases, and state health officials ordered it closed for two weeks to prevent further spread.
Some people in this deep-red corner of New Mexico appeared to fear Biden and Democratic energy plans more than the virus itself.
Locals expressed dismay at the “Green New Deal” – proposals that aim to combat climate change and pollution by reducing reliance on fossil fuels and shifting toward sustainable energy. Energy analysts, for their part, are expressing optimism about working with Biden. But critics in New Mexico said they feared his stance would hurt energy workers and their families.
Anger and arguments
Resentments boiled over on July 13, the day after Lujan Grisham ordered all restaurants to close their indoor dining rooms in order to protect public health. At least 50 protesters rallied on a street corner in downtown Carlsbad, waving signs that read “Let Us Serve.” Waitstaff and cooks from local restaurants begged to be put back to work, while two eateries – the Trinity Hotel restaurant and Pizza Inn – refused to close for weeks, leading the state to pull the owners’ licenses and threaten fines of up to $5,000 a day.
Battles of a quieter nature are dividing oil and gas experts. Some are adamant that fossil fuel prices will bounce back when the pandemic is defeated, which they believe will happen soon. “What we need to do is defeat the pandemic and demand for our products will return,” said Ryan Flynn, executive director of the New Mexico Oil and Gas Association.
Others argue that a full recovery could take years. Bernadette Johnson, vice president of market intelligence at Enverus, a Texas-based energy market analysis firm, predicts that oil and gas prices won’t return to pre-pandemic levels until 2023 or 2024.
“It’s not going to happen overnight,” she told New Mexico’s Legislative Finance Committee in July.
Stability in the storm
As difficult as things have been in the Carlsbad region, they could have been a lot of worse. Eddy County has weathered the storm with relative ease, compared with some of its even more oil-dependent neighbors. Its unemployment rate is one of the lowest in southern New Mexico.
In Lea County, an oil and gas hub immediately to the east, the unemployment rate hit 13.2% in September, according to the latest available data. Eddy County’s rate was 8.4%.
City officials credit Carlsbad’s resilience to its economic diversity. Tourism, fueled by nearby Carlsbad Caverns National Park, has historically provided a lifeline during the downsides of the oil industry’s boom-and-bust cycle, typically drawing a half million tourists annually.
The Carlsbad area also boasts a nearly 100-year-old potash mine and the Waste Isolation Pilot Plant, a nuclear waste repository with 1,000 employees. The facility has reduced its operations due to the pandemic – and has also reported 124 cases among workers. But it remains an important economic stabilizer, officials said.
“In Carlsbad and Eddy County, we have such economic diversity that when one industry dips down, the rest of them can hold it up,” said Jeff Campbell, director of marketing and business development at the Carlsbad Department of Development. “If you look at it like a chair, if you’ve got four legs on a chair, if one breaks you’ve got the others that are keeping you up.”
Meanwhile, schools in Eddy County have suffered a direct blow from the coronavirus: Like the Templetons, many families have had to pack up and leave in order to look for work elsewhere. To date, the K-12 school population has lost 400 students, according to Superintendent Gerry Washburn. The exodus could mean a substantial loss in revenue for the district, since New Mexico funds its schools on a per-pupil basis.
“We’re going to continue to lose kids – not just [children of] oil-field workers, but service workers and all of the support industries,” Washburn said.
Next year, the district will “bear the brunt of that declining enrollment,” possibly leading to staff layoffs or other cost-cutting measures, he said.
A healthier environment
Hard as it is to see a silver lining in all the struggle, local activist Nick King, a pastor at the Carlsbad Mennonite Church, believes the extraction slowdown could actually be a blessing for Carlsbad. It could allow the oil and gas industry to reevaluate its environmental impact, he said.
The owner of King Solar, which installs solar power arrays at homes and businesses, King said a transition to renewable energy was essential even in an oil town like Carlsbad. Fracking, among other problems, contributes to air and water contamination, excessive water use and greenhouse gas emissions, he noted. “For the whole long-term bigger view, COVID may be a benefit in slowing us down and getting perspective on what really is necessary and important,” he said.
Adrienne Sandoval, director of New Mexico’s Oil Conservation Division, has estimated that up to 708 oil and gas wells sit abandoned throughout the state. Capping them is necessary to prevent pollution, but owners today might not be able to afford it. That means the state would have to do the job, which can cost hundreds of thousands of dollars – or even millions – per well. Right now, New Mexico has the funding to repair only about 50 wells per year, Sandoval said.
‘Gotta roll with it’
Weeks after David and Amber Templeton were packing up to leave Carlsbad, the family was still at the RV park, unable to find work and waiting to hear about a job at a chemical plant in North Carolina.
David said he sold his bike in El Paso for about $12,500, and that was keeping the family afloat as they hung out in the trailer. They watched TV and waited for the phone to ring.
Amber, like many people across the nation, felt boxed in. As someone who’d served for years in the U.S. Army, she disliked the idea of a second term for Trump, an “idiot” who didn’t support the military, she said. But she worried that Biden would kneecap the oil and gas industry. “It’s one idiot or another,” she lamented.
And in the backdrop was the pandemic. “The COVID is horrible. It’s horrifying. It’s a constant fight,” she said.
“We’re just doing the best we can,” David offered. “You can’t really do much else.” The family would do whatever it takes to make ends meet. They’d travel the country in search of construction and energy jobs. “We go where the work goes,” he said. “We’ve just gotta roll with it.”