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.

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.

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.

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.

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.

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 reevaluate 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.

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.

‘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.” 

CARLSBAD – On a Thursday in late May, Michael Trujillo sat in the slightly softened evening light and watched his three children play in the water at Lake Carlsbad Beach Park, an unexpected patch of blue in the Chihuahuan desert. With his pit bull puppy at his feet, Trujillo passed slices of pizza from a stack of three Little Caesars boxes to two men in camp chairs. All three are oilfield workers, Carlsbad natives and, unlike thousands of others in the industry, all are still employed. But that hasn’t relieved their anger at the New Mexico governor and her coronavirus shutdown orders. “She needs to open the place up and let us do what we need to do,” the 36-year-old Trujillo said. 

Like a lot of people in town, Trujillo wishes Carlsbad was in Texas. 

In that state, just 40 miles to the south, Republican Gov. Greg Abbott didn’t order a COVID-19 lockdown until April 2 and allowed businesses to start reopening by May 1. By comparison, Democratic Gov. Michelle Lujan Grisham issued some of the nation’s strictest stay-at-home orders and didn’t ease them until June. That didn’t sit right with Carlsbad locals. 

“It just hasn’t hit us really; we don’t have many cases,” said Valentine Bustos, Trujillo’s cousin. None of the men wore a face mask. Neither did the scores of other people in the park. “We should have been able to reopen weeks ago,” Bustos said.

Welcome to Carlsbad, one of the most defiant and incongruous places in New Mexico. It is a Republican stronghold in a blue state — a speck in the desert with outsized clout. Nothing about it suggests vast wealth. But it sits atop one of the most productive oil fields in the world, a fabulously rich basin that makes the Carlsbad region the most powerful in the state, able to boost New Mexico or betray it. Even a small economic hit to Carlsbad can mean a gut punch to the rest of the state.

“We’re dependent on an industry that we have no control over,” said State Land Commissioner Stephanie Garcia Richard, who oversees oil and gas leases on state-owned land. New Mexico has over-relied on the Permian to fund state government for far too long, she said, her voice rising in frustration. “This industry is so volatile!”

The arrival of the coronavirus made this painfully evident. In February, after a year of record-breaking output in the Permian Basin, an ebullient New Mexico legislature believed it had an unprecedented $3.1 billion in oil and gas revenues. The state was preparing to spend the windfall on an ambitious “moonshot for education” and early childhood programs — long-needed initiatives that Lujan Grisham hoped would pull New Mexico out of its unenviable position as America’s worst state for child well-being.

By March, the price of a barrel of crude was plummeting. By April, the price of oil nosedived below zero for the first time in history. New Mexico’s windfall vanished, leaving the state with a $2 billion budget shortfall.

Lawmakers watched in horror as the COVID-19 pandemic thrust the world’s oil markets into chaos. Oil and gas businesses in other states laid off more than 100,000 workers, tried to calm investors and, in some cases, went bankrupt. And State Sen. John Arthur Smith, the outgoing conservative Democrat who for 31 years held a tight leash over New Mexico’s budget, had one last opportunity for an I-told-you-so. “The moonshot was quite frankly a fiasco, given a revenue stream that relies on oil and gas,” he said.

In keeping with its contrary nature, Carlsbad has weathered the crisis relatively unscathed. Carlsbad Mayor Dale Janway gave a running commentary on the city’s health while giving a recent tour through town. “Oil prices are trending, and we’re seeing more traffic,” he said, motioning out the window. It was May, and New Mexicans were supposed to be sheltering in place and wearing masks in public, but Carlsbad was full of bare faces. Janway wore a mask until he got into the pickup truck with reporters and immediately took it off. “We’re also still seeing a lot of growth and development around town,” he said.

There have been oil worker layoffs, but most have fallen on transient workers from out of state, according to New Mexico’s petroleum trade association. Locals who lost their jobs quickly found work in the city’s restaurants and shops — a fact underscored by Eddy County’s May unemployment rate of 5.6 percent, one of the lowest in New Mexico and about half the rate in Texas oil towns.

So why do Carlsbad residents wish they lived in the Lone Star state.

Trujillo, like a lot of people in town, is riled about New Mexico’s reactions to the virus. In keeping with their conservative political bent, many residents believe that COVID-19 has been overblown and that Texas, with its relaxed public health restrictions and swift reopening, is taking the right course. The recent surge of novel coronavirus cases in Texas — an increase traced directly to the early reopening — has done little to dampen their admiration. 

In the past two weeks, Texas has become a pandemic epicenter, reporting more than 6,000 cases in a single day, triple the number seen in previous weeks. Cases in Carlsbad and the wider Eddy County area have also been spiking, likely due to travel to and from Texas, health officials said. Between June 3 and June 29, the number of confirmed cases in Eddy County more than tripled, going from 23 to 78. One person has died.

Dale Balzano, a retired teacher and coach who in 2007 turned an old bank into a boutique hotel and restaurant called The Trinity, said that compared to Texas, New Mexico is a “hard place to do business.” The governor was picking winners and losers: Major corporations and box stores like Lowe’s were allowed to stay open, he said, while the little stores were forced to close. Balzano said he comes from a long line of democrats and labor union organizers. “But this governor scares the heck out of me.” 

Lujan Grisham’s aggressive public health response has scored her significant political points on the national stage and is among the reasons she is on the vice presidential shortlist for presumptive Democratic presidential nominee Joe Biden. But it has earned her few brownie points in Carlsbad and Eddy County. In early May, county commissioners drove that point home by voting to sue the governor, claiming that her emergency orders infringed on civil liberties and free trade.  

And after Lujan Grisham in May ordered masks to be worn in public to stem the spread of coronavirus, Eddy County Sheriff Mark Cage publicly refused to enforce it. “This is America,” Cage told the Carlsbad Current-Argus. The sheriff and his deputies would not be wearing masks, Cage said, and if that made anyone nervous, “then you have the right to move away from me.”

When Lujan Grisham coasted to office in 2018, she did so on a platform of big plans. In her 2020 budget, crafted with support from the Democratic-controlled legislature, she dramatically expanded child-care assistance, provided free preschool and two-year college, boosted health care and public safety budgets, and gave public school teachers substantial pay raises. The plan also included an overhaul of public education, which advocates hoped would close the state’s cavernous achievement gap for Native Americans, low-income children, English-language learners and special education students. 

For decades, lawmakers had said they didn’t have enough revenues to tackle the state’s desperate problems — child poverty, substance abuse, failing schools. And suddenly they did. The Permian Basin was generating fortunes for state coffers through oil and gas royalty payments. When in February the legislature passed a $7.6 billion budget — the biggest in state history — it did so with confidence that the Permian would continue to be a cash cow for a long time to come. 

For many in Carlsbad, this fed into a familiar grievance: Big spenders in Santa Fe were taking money from the southeast and funneling it away, never to be seen again by locals. In fact, Carlsbad has always been a place where natural resources have propped up both the state and the local economy.

“Raining down chemicals”

In Carlsbad, the environmental dangers came into unusually vivid relief earlier this year when a pipeline owned by Tulsa-based WPX Energy burst open and showered a plume of contaminants on the home where Dee George; his wife, Penny Aucoin; and their two children slept.

George, a Navy vet and former school bus driver who still lives on the land south of town where he grew up, has watched as the view from his front yard transformed from farmland and alfalfa fields to a maze of well pads, heavy-duty pipes, valves and flare stacks sprouting from the earth. 

On Jan. 21, George and his wife were jolted from bed at 2:30 a.m. by a deafening roar from the well pad just 100 yards from their front porch. When the couple rushed outside, they were doused with produced water, a chemical-laden waste product spewing from the ruptured line

“It was just raining down chemicals on us,” Aucoin recalled. “It smelled like gas, it was burning our skin and our eyes, and all I could think was ‘Oh my God, my animals!’”

The leak went on for almost an hour, and by the time emergency crews shut off the pipeline, the family’s property had been thoroughly soaked in a yellowish fluid. George and Aucoin had to euthanize their chickens and one of their dogs. The couple said they and their children have suffered debilitating health problems ever since.

“You smell that?” George asked on a recent day while standing next to the well pad where the pipeline exploded. A steady hiss emanated from the wellhead, wafting a strong gas-like odor through the air. “We’re breathing whatever that is every day.”

The incident at George’s home is not typical. But leaking wells, chemical exposures, spills and other accidents happen regularly, and require expensive cleanups. Preventing accidents is also expensive. Environmental groups fear that the recent crash in oil prices will leave operators unwilling or unable to step in. That could trigger a rise in pollution and an increase in orphaned wells.

More than 700 wells have already been abandoned in New Mexico, prompting state officials to seek a federal bailout to cover the massive cost of capping them. That process can carry a price tag of hundreds of thousands — or even millions — of dollars per well, costs that the state must cover out of its own pocket. 

Regardless of the risks, politicians from across the state’s political spectrum have embraced the Permian boom as the ticket to a better New Mexico. 

“We will finally put our great wealth to work at perhaps its most meaningful purpose: comprehensively changing the dynamic of early childhood education in this state, forever,” Lujan Grisham said when she introduced the 2020 budget in January.

Two weeks later, the pandemic officially arrived in America.

The house of cards

On April 20, West Texas Intermediate, the U.S. oil benchmark, fell not just slightly below zero: It plummeted roughly 300 percent, to almost $40 below zero, before bouncing back to positive territory. 

“What we’re seeing is not an oil bust. This is an everything bust,” said Ryan Flynn, executive director of the New Mexico Oil and Gas Association and an optimist when it comes to the Permian. “This is still some of the best real estate in the world for oil.” Prices have recently been on an upward trajectory, he noted: As of June 28, the benchmark was at $38.49 per barrel. As soon as the pandemic starts to ease, this side of the Permian will be back in business, Flynn and other insiders predict. 

Some economists, on the other hand, warn that the state and the oil and gas industry might never be the same. “We’ve been hit by a double whammy,” Jeff Mitchell, director of the University of New Mexico’s Bureau of Business and Economic Research, said of the virus and the oil slump. The Carlsbad region is “holding up OK,” and the number of rigs operating in the basin hasn’t fallen as sharply as in other places around the country. But if a recession follows, he said, it will upend the economy in unpredictable ways.  

The best-case scenario? Demand will quickly rebound. 

The worst possible outcome: The pandemic will drag on long into the future, oil prices won’t recover quickly, and oil and gas companies will start to slide into bankruptcy, damaging the region’s status as the El Dorado of oil.

No one knows how long Carlsbad can survive without the oil wells pumping. The current stall in demand has largely hit drillers and contract workers from out of state. Mom and pop operations, most of them based 75 miles north in the city of Roswell, are feeling the pinch more than Houston-based giants like Exxon and Chevron, but they have managed to hang on for now, industry observers said. 

Whichever scenario comes to pass, one thing is certain: New Mexico bet the farm on the Permian and drew a bad card. Carlsbad — which still has two potash mines, its tourism industry, the WIPP facility and some oil and gas work — might be managing the crisis. But without the oil and gas gravy train, the state government might not fare as well. Its moonshots could be grounded. 

Most economists and lawmakers say they expect a $2 billion to $2.5 billion budget shortage in fiscal year 2021 — a 30 percent decline in revenue from prior projections. “For the last two years, they’ve been talking about an oil boom they thought would last 20 or 30 years,” even though history shows the oil and gas industry doesn’t work like that, said Jim Peach, a retired economist at New Mexico State University who advises Carlsbad officials on the oil boom. “I tried to warn them,” he said.

On June 18, the state legislature launched a special session to address the sudden budget shortage. The revised budget, signed by Lujan Grisham on June 30, cuts spending by roughly $415 million. Most state agencies will see a 4 percent budget reduction, and educators will now get a 1 percent raise as opposed to the 4 percent raise that passed in February. Lujan Grisham rejected steep cuts to the free state college program and preserved funding for early childhood education. New Mexico will draw on cash reserves and federal funding for “revenue backfill,” the governor said.

Land Commissioner Richard, among others, is hoping the bust forces New Mexico to start transitioning to green energy. “There’s always going to be someone scratching at the ground in the southeast part of the state,” she said. But the Carlsbad region is “phenomenal” real estate for wind, solar and other renewable energies. In the future, it could become the home of a healthier kind of boom, she said.

Longtime Carlsbad residents, for their part, aren’t really worried about the future. They are more concerned with their lives right now. 

That May night at the Lake Carlsbad Beach Park, Trujillo and his cousins complained about their reduced hours at work, from 90 down to 40. It’s not easy to lose more than half your salary, Trujillo said.

On the other hand, they didn’t have much sympathy for the transient oil workers who’d lost their jobs. By most accounts, thousands of them left town when the pandemic hit and the oil boom ended. Maybe Carlsbad would be better this way — more like the old days, the men said. “It used to be that when you walked around, you knew everyone,” Trujillo recalled. 

As their shadows stretched out before them, Trujillo’s aunt and uncle arrived with their own camp chairs. The family sat talking. The kids ran up to grab another slice of pizza and pet the puppy. “We’re not here for the boom,” Trujillo said. “This is our home.”