Released September 30, 2024 | SUGAR LAND
en
Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Job prospects and wages for workers in the Permian Basin are on the decline, though oil production trends are on the rise, a report from the Federal Reserve Bank of Dallas found.
Non-farm payrolls edged up in August, federal data show, with the unemployment rate at 4.2% nationally as jobs increased by 142,000. Healthcare was among the strongest sectors, with 31,000 new jobs added to payrolls last month.
Manufacturing, meanwhile, shed 24,000 jobs, while the Labor Department found prospects changed very little in other economic segments, including oil and gas.
Job losses are a nagging concern as the U.S. central bank tries to curb inflation without slowing the economy to the point of triggering widespread unemployment.
On Thursday, the Federal Reserve Bank of Dallas found trends in the Permian were moving in contrast to national and state trends. The Dallas Fed put national employment growth at 1.7% annually and at 2.3% for all of Texas.
But in the Permian, non-farm payrolls declined 1.4% on an annualized basis through June.
"In the Permian Basin both employment and wages fell in the second quarter," the Dallas Fed found. "Oil prices declined slightly during the quarter, while oil production increased even with fewer rigs."
Crude oil prices have been on a downward trend for much of the year as global economies of scale either underperformed or were bogged down by rampant inflation. West Texas Intermediate, the U.S. benchmark for the price of oil, was trading at around $68 per barrel on Friday, down from $93.67 from the same date in 2023.
Lower prices, however, come as output from the Permian sets new records. The Dallas Fed found crude oil production reached a new high to average 6.2 million barrels per day (BBL/d) during the second quarter. That's more than the total inland production from a decade ago, though operators are doing more with less.
The Dallas Fed found the rig count in the Permian basin averaged 310 in June, compared with 346 during the same period last year. Rig counts had been an indicator of production trends, but the importance is fading as drillers turn to multi-bore wells and laterals that can extend for miles in the horizontal direction, improving their efficiency in the process.
The federal government, for its part, expects Permian production to average nearly 6.6 million BBL/d next year.
But as efficiency and production improves, wages are on the decline, the Dallas Fed found.
"Average private sector hourly earnings in Midland declined to $33.30 in July and fell to $28.64 in Odessa," the Dallas Fed reported. "Midland is down 3.0% year over year, and Odessa declined 1.5% year over year."
The report on economic indicators in the Permian followed the monthly energy market survey from the Dallas Fed. Activity in the oil and gas sector declined slightly during the third quarter, with upstream services firms deteriorating the most. And with commodity prices on the decline, the mood in the most prolific shale basin in the country is grim.
"It is just brutal out there," one respondent to a Dallas Fed survey said.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Non-farm payrolls edged up in August, federal data show, with the unemployment rate at 4.2% nationally as jobs increased by 142,000. Healthcare was among the strongest sectors, with 31,000 new jobs added to payrolls last month.
Manufacturing, meanwhile, shed 24,000 jobs, while the Labor Department found prospects changed very little in other economic segments, including oil and gas.
Job losses are a nagging concern as the U.S. central bank tries to curb inflation without slowing the economy to the point of triggering widespread unemployment.
On Thursday, the Federal Reserve Bank of Dallas found trends in the Permian were moving in contrast to national and state trends. The Dallas Fed put national employment growth at 1.7% annually and at 2.3% for all of Texas.
But in the Permian, non-farm payrolls declined 1.4% on an annualized basis through June.
"In the Permian Basin both employment and wages fell in the second quarter," the Dallas Fed found. "Oil prices declined slightly during the quarter, while oil production increased even with fewer rigs."
Crude oil prices have been on a downward trend for much of the year as global economies of scale either underperformed or were bogged down by rampant inflation. West Texas Intermediate, the U.S. benchmark for the price of oil, was trading at around $68 per barrel on Friday, down from $93.67 from the same date in 2023.
Lower prices, however, come as output from the Permian sets new records. The Dallas Fed found crude oil production reached a new high to average 6.2 million barrels per day (BBL/d) during the second quarter. That's more than the total inland production from a decade ago, though operators are doing more with less.
The Dallas Fed found the rig count in the Permian basin averaged 310 in June, compared with 346 during the same period last year. Rig counts had been an indicator of production trends, but the importance is fading as drillers turn to multi-bore wells and laterals that can extend for miles in the horizontal direction, improving their efficiency in the process.
The federal government, for its part, expects Permian production to average nearly 6.6 million BBL/d next year.
But as efficiency and production improves, wages are on the decline, the Dallas Fed found.
"Average private sector hourly earnings in Midland declined to $33.30 in July and fell to $28.64 in Odessa," the Dallas Fed reported. "Midland is down 3.0% year over year, and Odessa declined 1.5% year over year."
The report on economic indicators in the Permian followed the monthly energy market survey from the Dallas Fed. Activity in the oil and gas sector declined slightly during the third quarter, with upstream services firms deteriorating the most. And with commodity prices on the decline, the mood in the most prolific shale basin in the country is grim.
"It is just brutal out there," one respondent to a Dallas Fed survey said.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
