Thriving coronavirus, ailing oil industry leave Carlsbad residents struggling

Nine months into the coronavirus pandemic, Carlsbad residents are divided, defiant and in search of a silver lining.

Adrian Hedden and Ed Williams
Carlsbad Current-Argus and Searchlight New Mexico
Lunch time at Guadalupe Mountain Brewing Company, in Carlsbad, shortly before a November emergency health order ended indoor dining statewide. To create social distance, fewer tables were available.

CARLSBAD, N.M. — On an unseasonably hot afternoon in early November, Amber and David Templeton, who worked as crane and rigging operators, were packing their trailer to leave Carlsbad for good. Weeks earlier, their teenage son had gotten sick with COVID-19 and was too sick to travel, but he’d now recovered enough to hit the road back to Houston, their hometown.

They hoped to get a new gig once they arrived, but they weren’t optimistic: The Texas oil and gas industry had taken a huge hit during the pandemic, shedding nearly 40,000 jobs in the first half of the year — which meant the prospects there could be grim. But the prospects in New Mexico were even grimmer.

“It sucks right now,” David Templeton fumed as he washed the sleek black-and-chrome Harley-Davidson he bought during the boom, when workers like him were flush with money.

“I paid $20,000 cash for this bike, all $100 bills. Now I gotta sell it just to make ends meet,” he said. “I’ve been in this industry since I was 17 years old, and I never seen it this bad.”

For many people in this southern New Mexico city, the coronavirus has been the mother of all busts, reversing fortunes — and erasing livelihoods — at warp speed. The business losses are palpable.

In January, before COVID-19 arrived, the drive-through lines at fast-food restaurants were so clogged with local workers that getting a cheeseburger could take an hour. Guadalupe Mountain Brewing Company, a popular craft beer and pizza spot on the south end of town, couldn’t get through the day without running out of pizza dough. 

“See that wall right there?” asked manager David Allen, motioning toward the back of the restaurant’s outdoor patio. “We had to build all that extra kitchen space just so we wouldn’t sell out of pizzas each day.”

Now, thanks to a thriving virus and an ailing oil industry, workers have fled, customers have vanished and Allen has plenty of extra dough — except for the green kind. The state’s COVID-19 public health restrictions were an added sucker punch, he said. And there’s been no end in sight.

MORE:Oil and gas analyst warns New Mexico lawmakers recovery to continue to 2024

David Allen, assistant general manager of Guadalupe Mountain Brewing Company, in Carlsbad.

In November, COVID-19 cases skyrocketed and hospitalizations increased by 231 percent, state health officials announced. A record-breaking 3,675 new cases were reported on a single day, Nov. 19; the coronavirus by that time had killed more than 1,300 New Mexicans, including a 12-year-old boy, the state’s youngest victim. In response, Democratic Gov. Michelle Lujan Grisham issued strict new shutdown orders that directed New Mexicans to stay home and closed nonessential businesses, a repeat of the state’s first lockdown in the spring.

Small businesses are in a stranglehold, Allen said. “Your sanitizer, your masks, all those things we have to buy now, none of that comes cheap. It’s definitely put a hurt on us.”

The pain runs even deeper in the energy industry. In April, the price of U.S. crude oil plunged below $0 per barrel for the first time in history. Companies slashed their operations in the Permian Basin and cut the number of active rigs by more than half, to an average of 45 in October, as compared with 112 just a year ago. 

By May, about 4,100 of New Mexico’s oil-field workers had filed for unemployment, leading to about $500 million in lost wages and $20 million in lost revenue from personal income tax, state records showed. 

Only months ago, oil workers squeezed their trailers shoulder to shoulder in places like the Sun West Mobile City, living in luxury RVs they hauled to Carlsbad from oil plays in Texas, North Dakota or elsewhere. Now, all but a handful of the 300 camper lots are empty.

With the loss of many oil and gas jobs, most of the workers who filled the area’s RV parks - or “man camps” - have left.

From heyday to mayday

The coronavirus struck just as Carlsbad (pop. 28,000) was enjoying an economic heyday. Mobile home parks were growing, restaurants were expanding and corporate hotel chains were plowing millions into new lodgings.

Even after COVID-19 arrived, business seemed to be booming. A May economic development report by Carlsbad Mayor Dale Janway in the Carlsbad Current-Argus listed more than 30 new developments underway or near completion, including apartment complexes, housing developments and banks, not to mention a Hyatt House, a Hilton, a Best Western and other hotels.

“We thought the oil boom was going to keep coming,” said Mark Christensen, whose company, the Houston-based Christensen Building Group, purchased a dilapidated, abandoned downtown building last year and transformed it into the modernized Post Time Inn.

It seemed easy back then to read the tea leaves. Major multinational corporations — Chevron, ExxonMobil and Occidental Petroleum, among others — were pouring billions of dollars into infrastructure and personnel in the Permian Basin, considered the most productive oil field in the world. Stretching 250 miles wide and 300 miles long through the deserts of southeast New Mexico and West Texas, the basin had become a mecca for operators who used horizontal drilling and fracking to extract fossil fuels from almost unfathomably large shale deposits. A single section of the Permian, the Delaware Basin, holds some 46 billion barrels of oil and 281 trillion cubic feet of gas waiting to be harvested, the U.S. Geological Survey announced in 2018.

Michelle Fuentes says that right now she is the only housekeeper at the Post Time Inn, in the center of Carlsbad. “I’m doing okay,” she said. “I got to keep my hours.”

It was reasonable to assume there’d be a steady stream of employees to the area needing places to eat and sleep. At a ribbon-cutting ceremony in February, Christensen watched as the mayor and other city leaders packed into the Post Time’s parking lot and beamed at the sight of the new business — proof positive that Carlsbad was fulfilling its promise as an economic hub. For a month, oil workers, tourists and road trippers packed the motel to capacity. Then COVID-19 hit.

“It flipped our whole business equation upside down,” Christensen said. New Mexico’s public health restrictions have put the business in damage-control mode, he added.

“It’s sad to watch so many businesses have this steep decline. There’s only so much you can take before it becomes something you can’t recover from.”

Pumped for Trump

Locals are also struggling to recover from something a little further afield: the presidential election. Many people in this Republican stronghold refuse to acknowledge the victory of President-elect Joe Biden, in keeping with President Trump’s refusal to concede defeat. (No candidate has been “officially confirmed as the next president,” Eddy County Manager Allen Davis wrote in a statement to the Carlsbad Current-Argus.)

Seventy-five percent of Eddy County voters — 17,454 in all — cast their ballots for Trump, while only 5,424 voted for Biden, the secretary of state reported.

Trump flags fly over a heavy machinery rental lot on the outskirts of Carlsbad, nine days after the election.

In the days before the Nov. 3 election, a pro-Trump caravan with up to 700 vehicles drove north along U.S. Highway 285 through Carlsbad and Artesia — the oil and gas city to the north — and on to Roswell. 

And in retail stores and supermarkets, shoppers often went mask-free, in violation of the governor’s emergency health order. A recent trip to the local Albertsons — soon to become a viral hot spot — revealed many families and small children with their faces uncovered. By Nov. 18 the store had reported five COVID-19 cases, and state health officials ordered it closed for two weeks to prevent further spread

Some people in this deep-red corner of New Mexico appeared to fear Biden and Democratic energy plans more than the virus itself.

Locals expressed dismay at the “Green New Deal” — proposals that aim to combat climate change and pollution by reducing reliance on fossil fuels and shifting toward sustainable energy. Energy analysts, for their part, are expressing optimism about working with Biden. But critics in New Mexico said they feared his stance would hurt energy workers and their families.

“The shots are being called from places like San Francisco and by people like AOC [Democratic U.S. Rep. Alexandria Ocasio-Cortez] and Nancy Pelosi” — people who are demonizing the industry, said Larry Behrens, a Santa Fe-based director of the Power the Future, a fossil fuels advocacy group. “I would say to any politician advocating for this to come to New Mexico, look these workers in the eye and explain why they should have a new way of life.”

Anger and arguments

Resentments boiled over on July 13, the day after Lujan Grisham ordered all restaurants to close their indoor dining rooms in order to protect public health. At least 50 protesters rallied on a street corner in downtown Carlsbad, waving signs that read “Let Us Serve.” Waitstaff and cooks from local restaurants begged to be put back to work, while two eateries — the Trinity Hotel restaurant and Pizza Inn — refused to close for weeks, leading the state to pull the owners’ licenses and threaten fines of up to $5,000 a day.

Battles of a quieter nature are dividing oil and gas experts. Some are adamant that fossil fuel prices will bounce back when the pandemic is defeated, which they believe will happen soon. “What we need to do is defeat the pandemic and demand for our products will return,” said Ryan Flynn, executive director of the New Mexico Oil and Gas Association.

Others argue that a full recovery could take years. Bernadette Johnson, vice president of market intelligence at Enverus, a Texas-based energy market analysis firm, predicts that oil and gas prices won’t return to pre-pandemic levels until 2023 or 2024.

“It’s not going to happen overnight,” she told New Mexico’s Legislative Finance Committee in July.

The Navajo Refinery, in Artesia, just north of Carlsbad, can process 100,000 barrels of crude oil daily – more than any other refinery in New Mexico. Reports earlier this year revealed that the plant emits cancer-causing benzene at levels 300 percent higher than EPA benchmarks for healthy air. Plans are underway to allow the refinery to begin processing renewable diesel fuel as early as 2022.

Stability amid the storm

As difficult as things have been in the Carlsbad region, they could have been a lot of worse. Eddy County has weathered the storm with relative ease, compared with some of its even more oil-dependent neighbors. Its unemployment rate is one of the lowest in southern New Mexico.

In Lea County, an oil and gas hub immediately to the east, the unemployment rate hit 13.2 percent in September, according to the latest available data. Eddy County’s rate was 8.4 percent.

City officials credit Carlsbad’s resilience to its economic diversity. Tourism, fueled by nearby Carlsbad Caverns National Park, has historically provided a lifeline during the downsides of the oil industry’s boom-and-bust cycle, typically drawing a half million tourists annually. (The attraction was open on a limited basis from June to mid-November, when the COVID-19 surge led to its temporary closure.)

The Carlsbad area also boasts two national laboratories, a nearly 100-year-old potash mine, and the Waste Isolation Pilot Plant, a nuclear waste repository with 1,000 employees. The facility has reduced its operations due to the pandemic — and has also reported 124 cases among workers. But it remains an important economic stabilizer, officials said.

“In Carlsbad and Eddy County, we have such economic diversity that when one industry dips down, the rest of them can hold it up,” said Jeff Campbell, director of marketing and business development at the Carlsbad Department of Development. “If you look at it like a chair, if you’ve got four legs on a chair, if one breaks you’ve got the others that are keeping you up.”

From windfall to shortfall

One thing makes the Eddy County region different from the rest of New Mexico, however: If a chair leg breaks there, the whole state wobbles.

In February 2020, lawmakers in Santa Fe were ready to take advantage of a budget swollen with an unprecedented $3.1 billion in oil and gas revenues, thanks to record-breaking production in the Permian. The state planned to spend much of the windfall on ambitious and badly needed public education and early childhood initiatives. By March, the novel coronavirus had arrived, sending oil markets into a tailspin — and, with them, Lujan Grisham’s plans to address long-standing problems like child well-being.

By April, the state was facing a $2 billion budget shortfall.

Subsidies from the federal government have helped right the budgetary ship — at least for the moment. Buoyed by the CARES Act, New Mexico’s budget shortage is now far less than what was first anticipated. But analysts warn that, unless it finds other sources of revenue and ends its oil and gas dependency, the state’s long-term outlook is bleak.

An October report from the Institute for Energy Economics and Financial Analysis, an energy market think tank, found that unless oil prices double — an unlikely scenario anytime soon — New Mexico could face “economic disaster.”

“You can’t govern with that kind of instability,” said James Jimenez, executive director of the advocacy group New Mexico Voices for Children.

The economic whipsawing does major harm to education, he said. “When oil prices crash — and this won’t be the last time they do — it means our universities have to charge higher tuition and our K-12 finances suffer.” Students don’t get an adequate education, a problem with ripple effects far into the future.

Schools in Eddy County have suffered an even more direct blow from the coronavirus: Like the Templetons, many families have had to pack up and leave in order to look for work elsewhere. To date, the K-12 school population has lost 400 students, according to Superintendent Gerry Washburn. The exodus could mean a substantial loss in revenue for the district, since New Mexico funds its schools on a per-pupil basis.

“We’re going to continue to lose kids — not just [children of] oil-field workers, but service workers and all of the support industries,” Washburn said.

Next year, the district will “bear the brunt of that declining enrollment,” possibly leading to staff layoffs or other cost-cutting measures, he said.

Local environmental activists Gene Harbaugh (left) and pastor Nick King chat in King’s Carlsbad backyard. Both belong to a group called Citizens Caring for the Future and think the oil and gas slowdown could produce some long-term, big-picture benefits.

A healthier environment

Hard as it is to see a silver lining in all the struggle, local activist Nick King, a pastor at the Carlsbad Menonite Church, believes the extraction slowdown could actually be a blessing for Carlsbad. It could allow the oil and gas industry to re-evaluate its environmental impact, he said.

The owner of King Solar, which installs solar power arrays at homes and businesses, King said a transition to renewable energy was essential even in an oil town like Carlsbad. Fracking, among other problems, contributes to air and water contamination, excessive water use and greenhouse gas emissions, he noted. “For the whole long-term bigger view, COVID may be a benefit in slowing us down and getting perspective on what really is necessary and important,” he said.

From his backyard, King can hear the constant rumble of traffic passing through the city, much of it headed to the oil fields south of town. In pre-COVID days, the trucks and semis overwhelmed Carlsbad, clogging the roads through remote former ranching communities.

Some people saw dollar signs in the traffic, but King saw trouble. More oil and gas production, to him, meant more pollution. Today, “less gas is being sold,” he said. “In the bigger scheme of things, that’s our lifeblood, but it’s poisoning the rest of our world.”

Every few years, the region suffers a major environmental crisis, he added. In January 2020, a pipeline burst near a Carlsbad family’s home, showering chemical-laden wastewater on their property — and on them when they heard the explosion and ran outside.

Signs in Carlsbad warn of a possible sinkhole, caused by a brine well.

In 2008, the city discovered a potentially catastrophic sinkhole capable of swallowing parts of two major roadways, a rail line, a trailer park and a church, among other structures. The problem involves a defunct brine well that pumped water deep underground to produce the brine used in oil drilling — creating a massive cavity in the process. The cost of repair: an estimated $54 million in taxpayer money.

Environmental remediation could break the bank in other areas as well. Adrienne Sandoval, director of New Mexico’s Oil Conservation Division, has estimated that up to 708 oil and gas wells sit abandoned throughout the state. Capping them is necessary to prevent pollution, but owners today might not be able to afford it. That means the state would have to do the job, which can cost hundreds of thousands of dollars — or even millions — per well. Right now, New Mexico has the funding to repair only about 50 wells per year, Sandoval said.

Nate Todeschi and Dwaine Gardner stay at the sparsely populated Coyote Flats RV Park, in Carlsbad. As miners working on a project at the Waste Isolation Pilot Plant, the men have relatively stable employment compared to oil and gas workers, many of whom have lost their jobs — leaving RV parks that were full less than year ago largely vacant.

‘Gotta roll with it’

Weeks after David and Amber Templeton were packing up to leave Carlsbad, the family was still at the RV park, unable to find work and waiting to hear about a job at a chemical plant in North Carolina.

David said he sold his bike in El Paso for about $12,500, and that was keeping the family afloat as they hung out in the trailer. They watched TV and waited for the phone to ring.

Amber, like many people across the nation, felt boxed in. As someone who’d served for years in the U.S. Army, she disliked the idea of a second term for Trump, an “idiot” who didn’t support the military, she said. But she worried that Biden would kneecap the oil and gas industry. “It’s one idiot or another,” she lamented. 

And in the backdrop was the pandemic. “The COVID is horrible. It’s horrifying. It’s a constant fight,” she said. 

“We’re just doing the best we can,” David offered. “You can’t really do much else.” The family would do whatever it takes to make ends meet. They’d travel the country in search of construction and energy jobs. “We go where the work goes,” he said. “We’ve just gotta roll with it.” 

Searchlight New Mexico is a non-partisan, nonprofit news organization dedicated to investigative reporting in New Mexico.