Greg Nino would prefer to see oil prices climb.
A real estate agent in Harris County, in the suburbs of Houston, Nino's customers aren't usually the highly paid engineers and businesspeople based in the city's corporate center; they're the core of the oil sector's workers, schoolteachers, and small business owners. But the oil and gas sector has a way of affecting everything in Houston, even after years of economic diversification nurtured thriving health care and education sectors.
"One way or another here," Nino said, "people are tied into oil and gas."
Now, with volatile oil prices repeatedly falling to multiyear lows—in late March, oil prices hit 18-year lows, sometimes dropping below $20/bbl—oil cities are bearing the brunt of a double-hit faced by no other industry. Alongside disruptions to drilling and refining operations caused by the spread of COVID-19, the lockdowns across broad swathes of the world have suddenly eliminated millions of barrels per day of oil demand. It's a drop in demand unlike any seen before.
Making matters worse, a fallout between Saudi Arabia and Russia has resulted in the kingdom abandoning production cuts that helped prices rise since the last price crash, in 2014—and unleashed more oil on a world that needs it less than ever. The twin forces of too much supply and too little demand have largely sent prices in one direction: down. Even if OPEC+ reaches a deal to cut production in the coming days, analysts say it is unlikely to reverse the demand shock and significantly boost prices in the long term.
For oil cities—the corporate, manufacturing, and services hubs that the sector revolves around—that has enormous knock-on effects. Past price crashes have produced widespread layoffs and bankruptcies, sunk local real estate markets, and drained public funding for years. This time around, local officials and analysts say it could be even worse.
There are already signs of what's to come. In March, as Houston started to weigh social-distancing measures, Nino was still running open houses and talking to potential buyers. He had good reason to; February was a record-setter for home sales, and, within weeks, Houston's real estate market would enter a complete shutdown, with no showings at all. But, when it came to getting clients preapproved for mortgages, the banks—and real estate agents—started asking a lot of pointed questions. Do the buyers work in the oil sector?
Suddenly, a bidder from a big corporate oil company was no longer a great bet, he says, compared with someone who owns, say, a pawn shop.
“Ordinarily it’s the complete opposite," Nino said. "I would take the guy from Halliburton all day over the guy from the pawn shop.”