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Drop In Oil Prices Threatens Economy Of Tiny Texas Town

Jun 25, 2015
Originally published on June 26, 2015 1:06 pm
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Tiny Cotulla, Texas, is home to an outsized real estate investment. The South Texas town sits atop the oil-rich Eagle Ford Shale, and over the past five years, local fortunes in Cotulla increased as the price of crude shot up. But as Mose Buchele explains, the drop in oil prices is threatening to undermine the town's future.

MOSE BUCHELE, BYLINE: I didn't bother to reserve a room in Cotulla. Driving in, I was flanked by hotels along the highway.

Malana Hotel.

I even played a game...

Quality Inn.

...Calling out their names as I passed.

Holiday Inn Express.

Five years ago, the census put this town at under 4,000 people. There were four hotels. Now there are 25, with more being built. All that construction has earned this place a nickname.

LARRY DOVALINA: We're known as the hotel capital of the Eagle Shale.

BUCHELE: City administrator Larry Dovalina works in an older part of town in a storefront city hall near the railroad tracks. He says for years, Cotulla was like a lot of places in rural Texas.

DOVALINA: They're basically small cities that are dying on the vine, kind of forgotten.

BUCHELE: Then, one day, a man approached him about building a $3 million Best Western hotel. Dovalina had to ask, well, why?

DOVALINA: And he said there's a big oil boom coming, and from then on, it's gone up every year.

BUCHELE: The city gave out permits and put in water lines and sewage pipes. The hotels that rose up along I-35 on what used to be the outskirts of town filled mostly with men rushing to work in the oil fields. And Cotulla collected a 7 percent hotel tax. To Dovalina, all that new business meant progress for the community.

DOVALINA: Many of its children now enjoy very stable, very strong paying jobs.

BUCHELE: You hear a less upbeat note just a block from City Hall where a young man works on his car in front of an auto parts store.

So what's your name?

JOSE RODRIGUEZ: Jose Rodriguez.

BUCHELE: Are you from around here, or...

RODRIGUEZ: Yes, Sir, Man. I've been here all my life.

BUCHELE: What are the changes you've seen?

RODRIGUEZ: Well, Man, I'll tell you what. Since 2010, Man, the oil field boom hit here pretty damn good. And since then, you know, it's been booming in Cotulla, Man. But in the past couple of months, it went down, you know - fell off really bad - everybody getting laid off. I'm laid off, as a matter of fact, you know? Cotulla don't look too good right now.

BUCHELE: Not so, says Brenda Talbert. She's the president of the local Chamber of Commerce.

BRENDA TALBERT: I'm a positive person. I'm not a negative person, and I think this is a very positive thing.

BUCHELE: Talbert is certain the price of oil will rebound, and she says soon the city will need more hotels. What do you say if someone says to you, 25 hotels in a small town - that's just nuts.

TALBERT: And it is nuts. But when you look at the overall picture, and if you drive around, especially at night when all these service people are coming in, most of those parking lots are full.

BUCHELE: I took her advice.

Hotel Cotulla. Executive Inn and Suites.

I have to say, most of the parking lots looked pretty empty. There's one hotel I really wanted to visit, the first one to go up with the oil boom.

And here's the Best Western.

(SOUNDBITE OF BELL)

BUCHELE: Behind the front desk stood Katie Groda. At the height of the boom, she said, this Best Western was booked two years out. So what's it like now?

KATIE GRODA: You see, it's extremely quiet.

BUCHELE: After the price of crude dropped, the oil companies started laying people off. That sparked rate wars between the hotels.

GRODA: I remember the first time I pulled in here. You could see dilapidated buildings. Is that what the town's going to be left with? What are their plans to do with empty businesses?

BUCHELE: There are some ideas. Convert some hotels to permanent housing. Attract new visitors. But right now, she says, only one thing seems sure. These hotels won't be full again night in, night out anytime soon. For NPR News, I'm Mose Buchele. Transcript provided by NPR, Copyright NPR.