Permian Basin Economic Indicators

Employment in the Permian Basin region grew in the fourth quarter. The unemployment rate decreased slightly, while average hourly earnings rose in December. Energy prices increased in the fourth quarter and oil production continued to grow despite fewer rigs. Both home sales and median home prices increased in December.

Energy

Energy prices rise

The price of West Texas Intermediate (WTI) crude oil was $71.72 per barrel at the end of the fourth quarter, a 5.2 percent increase compared to the third quarter (Chart 1). Henry Hub natural gas prices increased 15.6 percent from the prior quarter to average $14.17 per barrel of oil equivalent (boe). The price for natural gas at Waha, near the producers in the Permian, also increased, swinging from negative $9.18 boe to positive $3.58 boe over the same time period.

Oil production grows on increased productivity

Oil production in the Permian Basin grew to 6.5 million barrels per day in the fourth quarter of 2024 (Chart 2). Production increased 1.3 percent compared to the third quarter of 2024 and was up 5.7 percent year over year. Although the average number of active rigs in the Permian declined, down 1.6 percent year over year, the number of new wells drilled has remained relatively stable. More wells were drilled per rig, while the lateral length of the wells also increased, contributing to the higher production.

Labor market

Midland-Odessa employment rises

Total nonfarm employment grew an annualized 1.2 percent in the fourth quarter (Chart 3). This was just below growth in Texas (1.3 percent) and the U.S. (1.6 percent) over the same time period. Midland-Odessa job growth amounted to 0.9 percent in 2024, behind both Texas (1.7 percent) and the nation (1.3 percent). All but three sectors in the Midland-Odessa region experienced employment growth in 2024. The mining, logging and construction sector added the most jobs in 2024, followed by leisure and hospitality. The professional and business services sector contracted the most, followed by government.

Unemployment ticks down

The unemployment rate in Midland declined in December to 2.5 percent from 2.7 percent (Chart 4). The unemployment rate in Odessa also declined, falling to 3.6 percent from 3.8 percent. The jobless rates for both Midland and Odessa remain below Texas’ rate of 4.2 percent.

Wages increase

Average hourly earnings increased to $36.98 in Midland and $32.92 in Odessa in December (Chart 5). Texas average hourly earnings remained between Midland and Odessa, increasing to $34.18. Odessa experienced the most growth year over year, up 8.6 percent, followed by Texas (6.0 percent) and Midland (0.9 percent).

Housing

Home sales increase further

Home sales increased 8.3 percent in December for the Permian Basin area (Chart 6). Compared to December 2023, home sales were up 18.9 percent. The median price of homes sold in the region also increased in December, rising 1.7 percent to $328,000. The median price of homes sold is below that of Texas, which was $344,000.