(Bloomberg) — Barry Marks can hear the Permian Basin slowing down.
It’s right there on country-music station 96.1 FM in Odessa, Texas, where commercials for shale-patch jobs used to fill the airways. Those kinds of radio ads have fallen by two-thirds, said Marks, the general manager for ICA Broadcasting LLC, which runs five stations in the area.
“A lot of those people working in the Permian Basin do not reside here,” Marks said. “So they’re heading home every two weeks. And they may just be staying home.”
Signs of a slowdown permeate the Permian Basin, the 55 million acres (22.3 million hectares) in West Texas and New Mexico whose abundant oil and widespread fracking fueled America’s quest for energy independence. Dragged into the downdraft of this year’s 19% drop in drilling are orders for everything from giant earth movers that build well-site roads to chemicals used to kill bacteria during hydraulic fracturing. Rig counts are down, hotel proceeds are declining, home sales are slowing and fewer jobs are available than just last year.
“If you can’t wring out any costs savings then you’ve got to buy less stuff if you want to get your costs down, and that’s the phase we’re entering into,” said Jesse Thompson, senior business economist at the Houston branch of the Federal Reserve Bank of Dallas. “You’ve seen this work its way through on the manufacturing side as quickly if not more quickly than we saw in the rig count on the oilfield services side.”
Through August, Permian employment has grown at an annualized rate of 0.7%, far less than the 11.4% growth of the same period last year, the Dallas Fed said Wednesday in its latest monthly report. Unemployment in August, the latest period available, is at 2.3%, inching up from the region’s low of 2% in May.