Oil prices drag down white-collar industry workers in Houston but lift blue-collar ones

Las Ventanas, a restaurant in west Houston that caters to oil and gas professionals, has struggled as crude prices have fallen. On the other side of town, businesses that serve blue-collar oil workers have been thriving.

Jan. 26, 2016 3 AM PT

Reporting from BAYTOWN, Texas — In the oil business, one man’s bust is another man’s boom.

As the price of crude tanked in recent months, oil companies have halted work at south Texas oil fields, laying off tens of thousands of workers. Home prices have taken a big hit, as have hotels, restaurants and all the other businesses that cater to corporate boardrooms and globe-trotting petroleum engineers.

But in this Gulf Coast refinery hub about 30 miles east of Houston, business is good. Really good.

“My company loves it when oil prices go down,” said Eric Schuelzke, 31, a process technician at an ExxonMobil refinery, one of a roomful of workers in refinery caps and blue coveralls who were busy downing fried shrimp and “Driller” pizzas here at Pipeline Grill. The parking lots in this part of town are filled with gleaming $60,000 Ford F-150 and Chevy Silverado pickups, some from as far away as North Dakota.

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“The guys in the offices are getting laid off, not us,” said Jimmy Phinny, 30, a process technician for Chevron. “I’m not hurting at all.”

As the price of crude oil has veered south over the last year, Houston has become a city of contrasts. Most of the pain has been felt in “upstream” management of crude production — among white-collar geologists and engineers in corporate offices clustered on a stretch of Interstate 10 known as the “Energy Corridor” on the city’s west side.

The “downstream” refineries, along another stretch of Interstate 10 to the east, now pay less for the crude oil they process. They are in the midst of a more than $50-billion construction boom, and their blue-collar employees are working round-the-clock shifts.

That cultural split is going to be there for a long time. It’s a red-neck, white-collar kind of split.

— Bill Gilmer, director of the University of Houston’s Institute for Regional Forecasting

“Houston is unique as a metro area in having that kind of balance,” said Bill Gilmer, director of the University of Houston’s Institute for Regional Forecasting. “That cultural split is going to be there for a long time. It’s a red-neck, white-collar kind of split. That always leaves the east side of town with an inferiority complex, which makes it more fun when they get a leg up.”

Of 40,000 estimated jobs lost in the oil and gas sector in the Houston area last year, many were on the west side, including about 13,000 white-collar professionals — lawyers, accountants, engineers, architects and consultants.

As the downturn lengthens, total job losses in the region could continue, Gilmer said. But they will not be as hard a blow as the last big bust in 2008, he said, and will be cushioned this year by job gains in other sectors, including 10,000 new construction jobs on the industrial east side.

Some of the largest refineries in the world ring the Gulf Coast, including ExxonMobil’s Baytown plant. They were already expanding to meet demand for liquefied natural gas and ethylene, a building block for plastics derived from natural gas, and now they have cheaper crude to process for gasoline.

The plants form a glittering cityscape on Baytown’s swampy horizon, framed by construction cranes. Last week, companies were hiring and RV parks were full of new arrivals; the city’s main drag was clogged with traffic.

“The east side has emerged,” said B.J. Simon, associate executive director at the Baytown-West Chambers County Economic Development Foundation. “The impact of construction has had a cascading effect here.”

Schuelzke and his friends didn’t attend college and instead started work here for more than $60,000 a decade ago in a field that now pays six figures. Their companies have been hiring steadily, about 20 new operators a quarter.

A refinery veteran sitting nearby chimed in that he tried to retire from ExxonMobil last year, but he was so in demand as a trainer that he returned.

Around town, building crews are at work on new grocery stores and restaurants. Pipeline Grill opened in 2013; there’s a new Target, Starbucks and Kroger grocery store about to open, but Baytown’s still a long way from rivaling upscale west Houston.

“The west side, they always get the nice housing, the hospitals and freeways. We’re like the armpit of Houston,” said the trainer’s wife, Erin, 57, who also works for an oil company and, like her husband, did not want to give her last name to avoid upsetting superiors.

“But in this economy, you’re much safer as a blue-collar worker,” her husband said.

The restaurant’s owner, Andrew Rosenberg, recalled how he almost opened his restaurant on the west side before banking on Baytown.

“Thank goodness I built it by the refineries, not the oil corridor,” he said. After halting plans to build near ExxonMobil’s new campus north of Houston, he added a second location in December in nearby La Porte and is opening a third by year’s end in the working-class Gulf Coast town of Lake Jackson, near Dow Chemical.

Over on the west side, luxury town homes sit empty, and million-dollar homes that once sold within 48 hours linger on the market weeks later. The Energy 10 office park has vacancies, as does the new Energy Center 5 office tower.

“It doesn’t have a tenant,” said Clark Martinson, general manager of the Energy Corridor District. Who, he asked, would be interested in moving into that empty building when there’s plenty of space available in BP and other oil company towers nearby?

Martinson has friends who have taken early retirement, sold summer homes or unloaded their homes here and moved into rentals.

“People were happy, living fat, and now it’s leaner,” he said. “It’s going to take a while for us to weather what’s happening with oil prices.”

Four years ago this month, oil commanded $98.48 a barrel. On Monday, a barrel sold for $30.34.

That price drop is hurting the west side Mexican bistro Las Ventanas, which caters to oil and gas professionals from nearby office complexes and has seen business lag.

Doug Poteet, 49, an offshore engineer, complained over lunch that “massive layoffs” have forced friends with decades of experience in the oil industry to go to work for UPS, Uber and car dealerships.

“What work there is, people are just almost cutting throats to get,” he said.

His lunch companion, Richard Gainey, 58, a pipeline engineer, was laid off in September and applied to the refineries to the east, only to discover his experience didn’t translate.

“They’re not hiring people from the upstream side. There’s a barrier to overcome. The recruiters are looking for a specific set of skills,” he said.

With Poteet’s help, Gainey had just snared a job with another west side oil company. But Poteet wasn’t sure other unemployed friends with homes and families would be as fortunate.

“If this goes on another year, you’re going to start to see foreclosures,” he said.

Another diner, a geophysicist named Bill, saw his entire department eliminated in October. He’s still working a bit with the company but as a consultant.

“There’s an awful lot of us out here now,” said Bill, who asked that his full name not be used because he’s still looking for a job in the industry. In his 36 years in the business, he said, he’s never seen a worse downturn. He’s still got his house in nearby Katy and a vacation home to the north on Lake Livingston, but he’s not sure how long he can hold on to them.

He was surprised to hear Baytown is booming, and smiled at the news.

“Well good for them — east side,” he said.

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Twitter: @mollyhf

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