Permian Basin Economic Indicators

September 26, 2024

In the Permian Basin both employment and wages fell in the second quarter. Oil prices declined slightly during the quarter, while oil production increased even with fewer rigs. Home prices increased in the Midland-Odessa region, and the number of home sales decreased, accompanied by rising inventories of existing homes for sale.

Energy

Oil prices decline amid concerns about Chinese demand

The price of West Texas Intermediate (WTI) crude decreased 2.0 percent to $81.54 in the second quarter of 2024 compared to the first quarter (Chart 1). Expectations for Chinese oil consumption moderated, driving the oil price declines, but myriad factors had contrasting effects on oil prices.

Oil prices have changed substantially since the second quarter. Find information on third-quarter movements in the Dallas Fed Energy indicators.

Permian Basin production continues to soar

Permian oil production continued to climb in the second quarter, hitting a new record high of 6.2 million barrels per day, even with 36 fewer oil rigs, 310 in June compared to 346 a year ago (Chart 2). This comes as field operators in the Permian have used creative techniques to increase oil rig efficiency. In part because of these efficiencies, oil production is up 6 percent year over year, despite the lower count.

Labor

Midland-Odessa employment declines

Permian Basin nonfarm jobs contracted 1.4 percent annualized year to date through June. Information, government and manufacturing sectors had the steepest declines, while mining, logging and construction lost the largest number of jobs. For context, the shrinking employment in the Permian contrasts with employment growth in Texas (up 2.3 percent annualized year to date) and the U.S. (up 1.7 percent annualized year to date). In the second quarter, total nonfarm employment grew 1.0 percent annualized. This second quarter growth was between the U.S. (down 1.3 percent annualized) and Texas (up 2.1 percent annualized).

Midland and Odessa hourly earnings decline as Texas grows

Average private sector hourly earnings in Midland declined to $33.30 in July and fell to $28.64 in Odessa. Midland is down 3.0 percent year over year, and Odessa declined 1.5 percent year over year (Chart 4).

Housing

Median existing-home price continues to rise, home sales slightly increase

The median price of homes sold in the region rose to $319,000 in June, increasing 2.2 percent month over month and 10.3 percent year over year. This is a sharp contrast to the Texas median home price, which decreased 0.8 percent month over month and 0.1 percent year over year. Home sales decreased 0.3 percent in the Permian region in June, while sales decreased 12.9 percent year over year (Chart 5). This compares to Texas, where home sales decreased 4.3 percent month over month and decreased 4.3 percent year over year. Midland and Odessa home sales are down 26 percent from the peak in May 2022.

Midland home inventories surge

Midland existing homes for sale, with 3.1 months of inventory, have surged past the prepandemic level of 2.6 months of inventory in 2019. Odessa has continued to hover below the prepandemic 2.4 months of inventory, with 2.1 months of existing home inventory currently available. Still, home inventories remain low for both cities. Midland and Odessa both have tighter markets than the state, which currently has 4.5 months of inventory. Six months of inventory is considered a balanced housing market.

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