Why this Texas town is thriving while Cleveland sinks.
New figures from the Bureau of Labor Statistics confirm what everybody already knows: If you’re looking for a job in Cleveland, Ohio, your best bet is a one-way ticket to Midland, Texas.
Midland is not the most scenic spot in the United States. (Its sister city, Odessa, was described as “the worst town in the world” in Larry McMurtry’s Texasville.) Imagine one square mile of downtown Atlanta plopped into the middle of a largely featureless savannah and you’ll have the idea. But the average rent on an apartment there is nearly twice what it is in nearby cities of comparable size, and rents are up more than 20 percent year over year — if you are lucky enough to get an apartment. Official unemployment is about 3 percent; real unemployment is effectively zero. The reason for that is a booming energy industry. But it’s a different kind of boom: Whereas previous Texas oil-and-gas booms have been driven largely by prices, this boom is under way when oil prices are high but not dramatically so, and natural-gas prices are on the low side (last year, they were at 13-year lows). This isn’t a price bubble, but real production improvements driven by technological advances.
Nellwyn Barnett of the Midland Chamber of Commerce is not telling any fairy tales. Sure, the capital of the West Texas oil patch has tried to diversify its economy, and has had some success, but it’s still an energy town. “Energy is our bread and butter, our primary industry,” she says. “Rather than try to paint a picture of a diversified economy for the media, we embrace energy. But there has been a great deal of diversification within the industry, which gives us a lot more stability than we’ve had in our past.” While wind energy is a significant economic presence on the edges of the Permian Basin, hydraulic fracturing and horizontal drilling mean that oil-and-gas outfits can go after more sources of energy from previously impractical locations. And horizontal drilling means that they can do so with less surface-level environmental impact.
Among the non-energy businesses setting up shop in Midland, the city is particularly proud of XCOR, a private aerospace firm specializing in suborbital flight and rocket-engine development. Both its headquarters and its R&D facilities are relocating from their original location in Mojave, Calif. In addition to the obvious economic benefits, the move will confer a unique distinction on the city: Midland International will be the only facility in the United States that is both a commercial airport and a designated spaceport.
Spacecraft and oil rigs might seem to be miles apart, but in truth the two high-tech industries have a great deal in common: a constant need for engineers, technicians, and scientists, a focus on materials development (XCOR has a line in developing non-flammable plastics), and shared environmental concerns.
Like their counterparts in the rest of the country, Midland’s oil-and-gas operators have been collaborating to keep ahead of environmental issues, working from the theory that they are better off in the long run going above and beyond what the law requires than pushing the envelope with the EPA and state regulators. Case in point: The sand dune lizard, as homely a West Texas creature as there is, had become a candidate for the endangered-species list. Rather than wait around for environmental regulators to tell them what they may and may not do in the lizard’s habitat, energy companies in Texas and New Mexico got together with state lawmakers, drew up their own conservation action plan, and presented it to the Fish and Wildlife Service, which signed off on voluntary conservation agreements that will protect nearly 90 percent of the lizard’s habitat. (Texas comptroller Susan Combs, who announced on Wednesday that she would not seek elected office again in 2014, was instrumental in putting the deal together.)
“Rather than say, ‘We can’t do this,’ we’re saying ‘How can we do this while maintaining the ecosystem?’” Barnett says. “The current legal standards may be good for today, but what about tomorrow? We’re taking a long-term approach.”