The Farmington area, which is suffering “extreme economic duress,” had the largest increase in its unemployment rate among 387 metropolitan areas nationwide in 2015 .
The northwestern New Mexico city saw its unemployment rate rise 2.1 percentage points last year, to 7.3 percent, according to a U.S. Department of Labor report released Wednesday.
The Farmington area lost about 1,200 jobs last year, primarily due to the continued drop in natural gas and oil prices, said Ray Hagerman, CEO of Four Corners Economic Development.
“I hope we have seen the bottom,” he said.
By comparison, Albuquerque’s unemployment rate rose 0.3 percentage points during 2015 to 5.7 percent. Santa Fe’s rate rose 0.6 percentage points to 5.1 percent.
The San Juan Basin in the Four Corners area has been hard hit by a yearslong drop in the price of natural gas, said Wally Drangmeister of the New Mexico Oil and Gas Association. The price fell more than 35 percent in 2015, part of a plunge that began in 2008.
That means about a quarter of the wells in the San Juan Basin are losing money, and the “pressure to control cost is dramatic,” he said.
During the last couple of years, “almost no natural gas wells (have been) drilled in northwestern New Mexico,” Drangmeister said.
That has caused layoffs in companies that sell equipment and other goods to the industry, and that in turn has hurt the general economy, he said.
“This is a region of the state that is under extreme economic distress,” Drangmeister said.
Also hurting the oil and gas industries in northwestern New Mexico are the effects of regulation, he and Hagerman said.
Most of the oil drilling in the Four Corners regions is on federal land, and that means producers are subject to a “paperwork bottleneck” in getting permits approved, Hagerman said.
And during the past year, while drillers were waiting for their permits, the price of oil was rapidly declining. From about $60 per barrel last summer, the price fell to $37 a barrel as of Dec. 31. On Wednesday, the price was $27.45.
The labor report showed that nationwide, unemployment rates were lower in December 2015 than they were a year earlier in 296 of the 387 U.S. metropolitan areas, higher in 79 areas and unchanged in 12 areas, according to the report.
The Atlantic City, N.J., area had the largest over-the-year unemployment rate decrease in December 2015, with a decline of 3.4 percentage points.