If you’ve seen the movie There Will Be Blood, you have an idea of what an oil gusher can bring to a small town. The main character in the movie is a hard man with his only goals being to find oil, find more of it, and find it faster than any other man or company in the world. He feigns interest in improving the town with the building of a new school, a bigger church, and anything else that will help grease the wheel of his pursuits.
The reality of a boomtown today is only slightly different than the movie, for the most part. The discovery of oil and gas can bring wealth to its citizens, but it also puts a sudden strain on infrastructure, housing, and crime. An influx of people needed to support and grow the production of the discovery brings in a variety of characters who chase their dreams of getting rich along with the companies doing the drilling.
A boomtown brings in the rich, who aim to get richer. The poor follow closely behind and aim to become less poor. The rest of the city is typically made up of the locals who don’t receive oil and gas royalties, the new locals who work for the rich, and the hustlers who come in to pick for scraps of leftover money.
What a boomtown means to a person, depends on the kind of person. And unfortunately, black gold attracts all kinds of people.
Land of Opportunity
One of the more surprising aspects of a boomtown is the diversity of culture. You will find people from extremely different environments, all set up to sell their wares and make a buck. Immigrants from Somalia set up shop in places like North Dakota, which is about as different from Somalia as is physically possible. Nomadic service workers who follow the smell of crude oil like hippies follow the Grateful Dead. Families who relocate so the father can have a chance to provide for his family, and his wife can stay at home with their kids. Convicts who cannot otherwise get a job that pays an above-average wage. These are all common examples of boomtown citizens and are far from the only types of scenarios that bring someone to the excitement of a city on the cusp of explosion.
Most new inhabitants of a boomtown are only there for the upswing, and will quickly chase the next big strike when the inevitable downward trajectory of production begins. With a “make hay” attitude, a boomtown can be a life-changing experience for someone with an enterprising spirit and little to lose. The urge to bet it all on black can be too hard to resist for someone with almost nothing.
Land of Extremes
A common trope amongst the oilfield faithful is that you should never buy what you can’t hang onto through a downturn. That means that if you have to finance most of what you are buying when times are good, you are just leasing it because as soon as the downturn comes, it will end up in the hands of the bank. The oil & gas industry is very cyclical. While a downturn may not be predicted with accuracy, it will happen. When it does, you should be as prepared as possible.
Young guys with $100K trucks, with an extra $40K in add-ons, look great when they are working 12-hour shifts for seven days per week. Those periods of maximum overtime can’t last, however. Typically, toys are the first thing to get hocked or re-possessed when the price of oil drops, or regulations cause upheaval in forecasted earnings.
Any crafty veteran of the oilfields will tell you that boomtowns are there for a short time only, and no one knows when the lights will be turned out and the derricks stop springing up across the horizon. If you are going to chase the boomtown, you need to save your money and invest wisely.
Necessity Breeds Innovation
Some people move to a boomtown to work and save and put their quick-earned gains to an even better use. A boomtown can be a great opportunity for hopeful entrepreneurs who have a service or product that can either help sustain the flow or crude, or better the lives of those people stuck in such a location. The key is to strike while the opportunity is rich because the boomtown lives and dies like a celestial star. They are born in an explosion and increase in size until they can no longer sustain themselves. They then collapse and disappear, leaving behind only relics of when times were good, matched by the stories of those who were there to take part.
Few boomtowns get it right. The diversification of a town built off of the people who chase for oil and gas is often an afterthought, one only considered when the decline of the city is already too far gone. Those who move to a boomtown to start their own business should focus on what can still be of value in the aftermath of a drilling campaign.
The excitement of a boomtown always manages to bring in new folks mixed with the old folks who move from town to town, from discovery to bust. Some people learn from the past, and some keep chasing the potential.
