Oil Boom Fuels Fastest-Growing Metro Area, Midland, Texas -- But at a Price

Midland, Texas, ranks at or near the top of the list in every measure of recent economic and population growth. See how your area compares.
by | September 12, 2013
At more than 50 stories tall (many of which aren't displayed in this rendering), the proposed Energy Tower at City Center extends more than twice the height of any other building in the city, housing luxury hotel rooms, condos and office space. Renderings Courtesy of Colliers International

Back in 2008, Midland, Texas, Mayor Wes Perry knew his town was about to take off.

The city of nearly 150,000 in west Texas sits atop the Permian Basin, one of North America’s largest oil reserves. For decades, much of the oil remained untouched, contained in rock formations buried deep beneath the surface. But then Perry, an oilman himself, says he starting hearing how experiments using hydraulic fracturing had proved promising.

“When people figured out how to [produce oil] through fracking, that was the game changer,” he said.

Since then, Midland has transformed itself into the nation’s fastest booming metro area, ranking at or near the top of the list of every major measure of recent economic and population growth. The latest census estimates reported Midland’s population swelled 4.6 percent in only a year, topping all other metro areas. Its economy similarly expanded payrolls by 6.2 percent over the past 12 months, the second largest gain nationwide.

While Midland is thriving, the influx of companies and new workers haven’t come without growing pains.

All around the city, consequences of the boom are apparent. Major roadways spanning the region’s flat plains are more congested. Asking prices for rentals have doubled. Longer lines greet customers at restaurants and other local businesses.

Midland’s longtime residents have met the growth with mixed feelings.

“Some are experiencing the financial successes,” Perry said. “Plenty of other people are really not interested in change and growth.”

What’s likely the top public concern is the skyrocketing cost of housing. Average monthly asking rent prices climbed from less than $600 before the boom hit in 2007 to $1,110 last quarter, according to real estate research firm Reis, Inc. Soaring home values have also pushed would-be homeowners out of the market.

Public employees are not immune from feeling the pinch, either.

Finding affording housing is particularly problematic for school teachers, many of whom are new to the area. The Midland Independent School District, which employs about 1,600 teachers, created 135 new teaching positions this school year to accommodate higher enrollment.

Ed Zachary, the district’s executive director for human resources, said new teachers just starting out can’t afford both costly rents and paying off their college loans, while some more experienced teachers struggle to hold onto their apartments as housing costs continue to rise.

A local foundation has stepped up, contributing up to $500 per month in rental costs for qualifying teachers. About 133 teachers were participating as of last week.

The district is also exploring the possibility of leasing prefabricated homes from a company to rent to employees at a reduced rate, Zachary said. Midland Memorial Hospital has even converted a number of unused rooms in its west campus into short-term affordable housing units for teachers and hospital staff.

Out around the oil fields, many workers reside in “man camps.” Chain motels also popped up throughout outlying areas of the county, proving additional temporary housing.

One developer is pushing a project that would drastically alter Midland’s skyline. At more than 50 stories tall, the proposed Energy Tower at City Center extends more than twice the height of any other building in the city, housing luxury hotel rooms, condos and office space.

Another common complaint residents gripe about is the traffic, as many aren’t accustomed to sitting through two cycles of traffic lights. The city, in response, widened roadways and synchronized more traffic signals, Perry said.

The oil boom has also created a barrier to government employment: companies are poaching their workers. The school district’s Zachary said some teachers and administrators leave for more lucrative careers in the oil fields. Perry said the city has found it difficult compete with private companies for truck drivers and mechanics, so they’ve offered signing bonuses and additional training.

A similar story has played out in Odessa, a slightly smaller city about 20 miles down the interstate.

There, the city’s utilities department has only filled 14 of 43 budgeted positions as qualified workers pursue fatter paychecks in the energy sector.

“We just can’t retain and recruit employees to compete with private industry salary,” said Andrea Goodson, the city’s public information officer.

From 2009 to 2011 (the most recent data available), Midland’s personal income per capita jumped a staggering 25 percent – more than any other metro area, according to the U.S. Bureau of Economic Analysis. It increased 12 percent between 2010 and 2011, second only to Odessa.

Midland’s strategy to adapt to economic and population growth, Perry said, has centered on long-term investments in capital projects. Rather than resurfacing streets, for example, the city is completely rebuilding more of them.

At the same time, now might not be the best time to break ground on every project. Perry pointed out that demand for concrete in Midland has pushed up prices to among the nation’s highest, forcing the city to put some construction plans on hold.

Although the city enjoys healthy tax revenues for the time being, Perry wants to avoid borrowing money.

“We know this is a cycle,” he said. “If we just went full bore and got everything done, that could come back to bite us when things slow down.”

The region has experienced its share of oil booms and busts in the past. The biggest shock occurred in the mid-1980s, when several of the large energy companies moved away and left their equipment out to rust.

Today, more than 400 drill rigs dot the Permian Basin.

Hoxie Smith, director of Midland College’s Petroleum Professional Development Center, estimates the region holds enough oil to continue production at the current pace for at least another 100 years.

“I see it staying pretty high for quite some time, unless an economic event occurs and the prices come down,” he said.

Production only recently plateaued locally, Smith said, primarily because of a limited supply of skilled workers and capital investment required for new drilling operations.

As a longtime resident and president of an oil and gas firm, Perry remembers the oil bust of the 1980s quite well. He knows his city’s current boom won’t last forever, either.

“We know it was there one day and can be gone again, so we better be careful,” he said.

Fastest-Growing Metro Areas

The following table shows the Census Bureau's metro area estimates for population change between July 2011 to July 2012, the most recent data available:

Economic Data

View year-over-year job growth for metro areas

The following metro areas experienced the largest increase in personal income per capita from 2010 and 2011, according to the Bureau of Economic Analysis:

  • Odessa, TX: 12.4%
  • Midland, TX: 11.9%
  • Hanford-Corcoran, CA: 9.3%
  • Clarksville, TN-KY: 8.9%
  • Elizabethtown, KY: 8.8%
  • Peoria, IL: 8.5%
  • Waterloo-Cedar Falls, IA: 8.1%
  • San Jose-Sunnyvale-Santa Clara, CA: 7.6%
  • Williamsport, PA: 7.5%
  • Farmington, NM: 7.4%

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