It is no big secret that there is an oil boom occurring across the United States, with the increased use of fracking technologies and enhanced directional drilling capabilities in the oil shale formations found in Pennsylvania, Texas, New Mexico, and other western states. While this new drilling activity has resulted in significant revenue generation for local governments around oil country, it’s not all good.

This same business activity has presented a number of communities in the oil states with unique and problematic challenges with regard to maintaining quality of life, especially providing affordable housing.

Communities located in the oil-patch areas tend to be smaller, have fewer financial resources, and have little or no experience dealing with the demands of heavy growth pressure.

Snapshot of Eddy County

Eddy County in southeastern New Mexico is one of these places. The county’s total population based on the 2010 U.S. Census is 50,000. Residents live in one larger town (Carlsbad), one intermediate-sized town (Artesia), and a number of smaller villages and colonias (unincorporated home sites).

In addition, people reside all around the unincorporated parts of Eddy County in a nomadic way, tending to the needs of the oil industry.

Currently, the county has an unemployment rate of about 3 percent, with no unforeseen changes for the oil industry as of yet. The personnel needs of the industry have remained unfulfilled, even though people from Arizona, Oklahoma, Texas, Colorado, and Louisiana have poured into Eddy County looking to fill open positions.

Workers with specific skills can literally get hired on the spot if they are heavy equipment operators, electricians, plumbers, experienced roughnecks, or have a valid commercial driver’s license. In addition to the individuals who have come here for employment, a number of oil-field service companies have also arrived, being subcontracted out by larger oil companies.

The result has been that the area’s already limited housing stock, especially for affordable units, has been hard-pressed to meet demands.

Oil, however, is a cyclical industry, and people working in the “oil patch” know that the good times will end sometime in the future. With this in mind, the recently arrived view their time in Eddy County as a temporary job with no intention of setting down roots. Many have left their families at a permanent home location, returning on regular visits like soldiers returning home on leave.

Pressing Housing Issues

What has been interesting to follow has been the issue of affordable housing. With the influx of new workers, home prices have remained high and vacancies low. This has made it difficult for all of the economic sectors to provide housing for their employees.

At first, the newly arriving workers leased a lot of the available rental units in the area. Available single-family units were also absorbed quickly. Realizing that this type of housing market makes the recruitment and retention of professional workers problematic, Carlsbad and Artesia started pressing for new apartment developments.

Even some local oil companies have started building their own apartments for their workers but in small numbers. While construction is now taking place, these types of projects take time and money to complete.

What Eddy County then started seeing was a number of five-wheel trailers and recreational vehicles being placed in the front, side, or rear yards of homes; then a second vehicle showing up; and maybe even a third. County staff started finding groups of RVs and trailers behind churches and commercial businesses.

Upon investigation, it was found that home or business owners were renting out their yards to oil-field workers who then were tapping into the home’s septic system and water line. We also found out that these workers had good paying jobs, but they were responsible for finding their own housing.

Without housing to be found in the county, companies found their own. One oil company rented an entire hotel with a restaurant and converted it into a company boarding house, double-bunking their employees and feeding them in the restaurant.

The current phase of housing provision is that companies are creating their own ad hoc mobile home parks for their employees and actually wanting to do it correctly but in a temporary fashion so that when the oil-patch work stops, the site can be broken down easily as workers depart the area. This includes sewage holding tanks that are pumped on a regular basis, solid waste pickups, and potable water tanks set up on-site or tapping into someone’s well.

County Response

Code enforcement for the county had always relied on the state of New Mexico’s environment department to regulate septic connections, but it became clear that the state did not have the ability to deal with the magnitude of this issue. County staff also found that because Eddy County did not have zoning to regulate the placement of accessory structures and vehicles, it had to rely on its code enforcement ordinances, which we quickly found to need review and possible rewrites.

A more typical response to providing housing would be to construct a large number of housing units, either through direct government intervention or private sector encouragement. The question people might have is: Where is the private sector response to an obvious market windfall?

The answer is that Eddy County is located in the southwest part of the county, which is arid. Drought is not a stranger to residents in this part of New Mexico. Water is the key to everything in the southwestern United States.

There have been plans for new development to be approved but several have also been denied in adjacent communities out of concern for the ability to provide adequate potable water. Local water provider co-ops are already limiting or even refusing new connections due to the area’s drought conditions.

Eddy County staff is adjusting to this boom by reviewing its code enforcement ordinances to see if we can better control the negative aspects of this growth. The application of zoning in the unincorporated areas is still a difficult issue to accept in this part of the country, but staff will do what we can to safeguard health and safety.

We will also look to create a form of temporary approvals so that we can better regulate these sorts of ad hoc trailer parks that have been appearing.

Lessons Learned

Managers would probably enjoy working in a place where there is virtually no unemployment and a local government has no debt and is paying for infrastructure projects with cash due to oil and gas tax revenues. But there are clearly costs associated with this boom, including high home prices, low housing availability, high drug use and related crimes, and other familiar sounding ills.

What makes this situation more perplexing is that the oil boom is a temporary situation, so the creation of large amounts of permanent housing and the expensive installation of supporting infrastructure may have negative consequences when the work stops and the temporary workers leave.

What may well be left behind may be a lot of unused or underused infrastructure that needs to be paid for and maintained, as well as permanent residential structures that may remain vacant and also underused. The key is looking for ways of creating temporary housing to accommodate the boom that may be disassembled as oil jobs slow up and the workers leave.

Regardless of a local government’s previous experiences with heavy growth and the amount of financial resources available, locales found to be sitting atop oil shale formations or other valuable resources need to assess the impacts to their housing stocks before companies and their workers arrive on the scene and determine—if possible—what can be done about mitigating the impacts.