In the Land of the Oil Bust, the Repo Business Booms
Oil closed at its lowest price in more than six years yesterday and, while it’s risen slightly since then, some project the price to drop even further.
In some parts of Texas that's bad news for almost everyone. The economic ripple effect of low prices has led to layoffs and slammed the brakes on local economies. But there’s one business that’s going through a boom in the oil patch right now: the repo man.
Ryan Peck says when you’re a repo man, some jobs are harder than others.
“You do run into some good people. The hardest part for me is if there [are] kids involved,” he says. “It’s just tough because you know the kids are doing without. So, I just get the job done; try to be as nice and polite as possible. But, yeah, sometimes it is tough."
Lately, he’s been busy at his impound lot on the south side of Corpus Christi. He just picked up a couple of brand-new pickup trucks and a few work trucks, all of which are headed to auction.
It’s a lot of trucks, and that’s caught Peck’s attention.
“In our business there [are] trucks that we normally don’t pick up, three-quarter-ton diesel trucks, one-ton trucks,” he says.
They’re pickup trucks tricked out with suspension lifts, good stereos, rims. Work trucks that are also status symbols for the, well, mostly guys that drive them.
“[T]hey’re gonna pay those bills before they’re gonna pay anything else,” Peck says. “We’re now seeing that those trucks are getting picked up.”
So, where are they coming from? Peck stops at a battered black Dodge pickup.
“Actually, this truck right here, if you want to look in the back of it, it’s got tons of oilfield equipment,” he says. “Tools and wrenches and stuff like that that was used in the oilfield.”
He says during the drilling boom, oil workers bought a lot of expensive trucks. Now the boom's over, and they can’t make payments. So he’s doing a lot of repossessions in the nearby oil town of Alice.
“Most of these trucks that we have here are coming out of that town,” he says. "Alice would be probably my first stop to find out what’s going on.”
There are streets in Alice that remind you what the town’s all about. They have names like Energy Avenue and Industrial Boulevard. These are where big oilfield service companies like Halliburton brought jobs during the boom. When the bust came to Alice, the ones hit the hardest were the oilfield workers.
“Basically, they tell you, ‘There’s no work right now. We’re gonna take the rig to the yard, and we’ll call you when we need you,’” says Javier Gamez outside a food pantry.
It’s been three months since Gamez heard those words. He says he used to make up to $6,000 a month as a derrick man. Now he’s lucky to pull in $600 doing construction work.
“So, that's how it goes,” Gamez says. “And, like I said, you’re accustomed to getting pretty good money, and you have a nice truck, and you have a nice home, and you have to start downgrading, letting things go.”
He bought a truck, but he says he doesn’t have it anymore. A lot of his buddies lost their trucks as well. They ignored the warnings of old timers who lived through booms and busts before.
“They’d tell us, ‘You need to prepare, you need to save, you need to save!’” he says. “And us, being young, we’re like ‘Ah, heck, I’m buying a new truck. I can afford it.’ They’re like ‘Don’t do it. Keep your truck. It might be a 2005, but it’s a nice truck. You don’t need the 2015.’ And us, being — not dumb, but unprepared — we do it.”
It might sound shortsighted, but a lot of people thought the good times would last. Even a lot of local governments are grappling with a big drop in tax revenue.
“That snowball effect happens, where we don’t have any money because we’re not working, so we don’t spend at the restaurant,” Gamez says. “So, now the poor lady at the restaurant loses hours, and it just goes down the line and before you know it, it’s a recession, the way we’re in.”
Sitting at his desk beneath a rumbling AC window unit, Jacob Lopez, owner of Coyote Auto Sales in Alice, remembers when the trucks used to fly off the lot.
“Seventy percent of my business was heavy-duty trucks, lifted diesel four-by-fours, and now I just don’t have that demand anymore,” he says.
In other parts of the country, low gas prices are encouraging people to buy bigger vehicles. Not here, Lopez says. He sells more affordable, fuel-efficient cars. But, really, most people aren’t buying any cars at all.
“I saw the business drop off after the spring, when you started seeing the rigs being shut down,” he says.
Peck says if the downturn keeps up, car loans will be harder to get. Fewer people will buy cars, so fewer people will default on their loans. That means eventually his business will take a hit. Not even the repo man can outrun the oil bust’s snowball effect.
“If nobody’s paying for cars, nobody’s buying cars as well,” he says. “[I]t comes back to get everybody. Nobody’s safe from it.”
But, Peck says he’s saving his money, just in case the repo bubble becomes a repo bust.